A bit of both I would wager although, pragmatically, more of the former than the latter, in line with a general acceptance that something had to be done to halt the mortgage market crisis and re-establish a solid foundation for the future.
MMR has certainly done that and was accepted and assimilated a lot more amicably than its regulatory predecessor, the retail distribution review.
All loans are now income-verified and expenditure is scrutinised much more closely than before. In addition, self-certification mortgages are a thing of the past, while interest-only lending has been scaled back significantly.
But whilst major issues such as affordability have been addressed, many observers argue that MMR has caused a further slowdown in the market, restricted the lack of products, reduced lenders’ appetite for risk and left us with a legacy of mortgage misfits.
Ironically, although there has been a downturn in lending, it has co-incided with the lowest mortgage rates ever seen.
So where does that leave us?
Personally, I would suggest the majority of people who read this will agree that MMR has been a necessary change for the better.
At the time of writing, exciting new products, a range of higher LTVs and attractive fixed-rate deals, together with ‘old’ and new lenders entering the market, are clear signs of revitalisation.
However, lending into retirement, applications from the self-employed or those with impaired credit records are obstacles that need to be overcome.
Consumer education too is an area that would benefit from a greater focus, as is the value of professional advice. The mortgage sector still needs to catch-up with the rest of the financial services industry in highlighting the importance of professional financial advice and the profile of those who provide it.
There is still a feeling amongst the general public that only those with sophisticated needs require advice. The mortgage sector is less blighted by this than the rest of the industry – as people are familiar with the well-established advice chain – but there is still an urgent need to raise public perception of its increasing importance in everyone’s lives.
Speaking of the advice process brings me nicely to the changing shape of post-MMR (and post-RDR) distribution.
The almost wholesale withdrawal from the non-advised sales process by banks and building societies and the closure of their sales forces promises to open up a whole new world of opportunity for the intermediary sector.
In all fairness, the trend began a year in advance of MMR, but the gap between direct versus intermediary sales has continued to widen at pace since, with the latest figures showing it at its highest level for seven years: approximately 63%.
Lenders have been quick to acknowledge that they are seeing much better quality applications from intermediaries, saying that the MMR-inspired cultural shift has made brokers operate to higher professional standards.
Since April 2014, there has been a flood of lenders using brokers for the first time as their direct-only operations fold.
The amount of mortgages being sold by brokers has increased consistently as a result of the FCA making advice compulsory on all mortgages and looks set to go on rising. Lenders are keen to get involved, as most have been struggling to meet their lending targets through branches and to train staff to full advice levels.
MMR has been described as little more than a bump in the road, but there have been few signs of disruption. With the CML predicting a 7% growth in lending this year to £222bn and the NHBC reporting an increase in housing starts, it could be construed to have done a pretty good job so far.
