“In managing to resist the hysteria, generated by those who say these rules do not go far enough and those who say they go too far, the FSA has tried to produce a balanced, sensible blueprint for future mortgage transactions.
In the main they have managed to achieve this and whilst you could say that actually for most borrowers there will not really be much of a change from where the market is now, as it could be argued that lenders have corrected themselves post-crunch, some rules were undoubtedly needed to prevent a recurrence of past issues.
Whilst decent independent brokers have been following this approach for many years; advising carefully, assessing needs and circumstances whilst acting in the best interests of the customer, the whole question of advice needed to be addressed across the board.
It was always crazy that a first-time buyer could walk into a branch and come out with the biggest loan they are ever going to take out without getting any advice.
Although the MMR has at least rectified many issues, the FSA have still caved in to lenders’ demands that some product changes, especially where fees are added to the loan, can still be done on an execution only basis which could lead to some customer discontent.
It is sensible however, that the FSA has stopped short of bans on interest-only, age caps and the like, leaving it open to a certain degree to lenders to manage their own affairs, but the challenge will be in how lenders choose to interpret these guidelines.
This in itself will give us all a clue as to whether lenders actually want to lend or not.
The very act of publishing the final rules should remove much of the uncertainty that some lenders used as an excuse for over-tightening lending criteria and I hope to now see a sensible relaxation which will allow more borrowers into the market.
An instant relaxation of these rules for so called “mortgage prisoners” is also welcome, which should help to protect some of these borrowers at least from being used as a profit making tool on rising variable rates as they are unable to move elsewhere.
It is however disappointing that individual authorisation of advisers has still been deferred as this one simple item would do much to send the last of the cowboys running to the hills.
In short, whilst it is good, it is not quite right yet, but it will help to standardise mortgages going forward and ensure that the customer’s best interests are being served.
In other words loans are affordable, there is a plan for paying it back and sensible advice is given. This in itself will reduce issues in the future.”
