This has resulted in a number of changes to lending practices, one of the most significant being that all lenders have to provide a KFI (Key Facts Illustration) to any borrower before a mortgage application form is completed.
A KFI must include, not only standard information, such as amount, APR, monthly payment etc but, additionally broker commission, compulsory insurances, the effect of interest rate movements and maximum redemption penalties.
The additional data required has involved most lenders in completely upgrading their IT systems, and in some cases replacing them altogether in a very short timescale.
Most lenders said they had some form of system in place, but it is clear that for a significant number this was only a temporary system.
Details of Moneyfacts survey:
No. of lenders contacted 107
No. who responded 104
No. who say they can produce a KFI direct to a customer 99
No. who can produce a KFI online 47
No. who can produce a KFI through intermediaries 77
In the run-up to 1st November, Direct Line suspended mortgage lending for 11 weeks and currently Giraffe Mortgages and Sainsbury’s Bank are not accepting new mortgage business. Others have simplified their range of mortgage products including Abbey who has withdrawn it’s flexible mortgage.
Also, some mortgage providers are complaining that they are unable to lend as they are still waiting for a list of authorised intermediaries from the Financial Services Authority.
