Industry blasts conservative market
IMLA’s latest Intermediary Lending Outlook research for January found that almost three quarters (74%) of brokers and nearly two thirds of lenders (65%) have this view.
Last year the market had to adjust to the Mortgage Market Review in April while the Financial Policy Committee introduced a loan to income cap in October.
Peter Williams, executive director of IMLA, said: “Regulation is vital to ensure that mortgage lending is safe and in proportion to consumer needs and the wider economy.
“But when families with dependents are among those who find themselves at a disadvantage, there are legitimate concerns that the pendulum has swung too far as a result of successive, incremental measures.
He added: “The market is clearly still adjusting to changes including the MMR and the Financial Policy Committee’s interventions.
“With the European Mortgage Credit Directive on the horizon and the latest Basel Committee proposals, it will become even more of a challenge to understand the individual impacts of these different interventions.
“What’s clear is that each new layer of control squeezes more people out at the margins. As the boundaries grow tighter, we must work to avoid unintended social engineering as a result.”
Brokers and lenders think low income borrowers and those with dependents in particular have felt the squeeze after the MMR was introduced.
The majority (84%) of brokers have been unable to source a mortgage for at least one client in the six months to January.
This was commonly because the client had adverse credit (53%), were on an interest-only deal (53%), were trying to borrow into retirement, (40%) or they were self-employed or had an irregular income stream (46%).
But there is still some optimism in the market, as half of brokers (51%) and lenders (53%) said they thought market conditions were improving in January.
Williams added: “Current trends suggest that owner-occupation may fall below 62% by the end of the next parliament, and there is a real need for government, regulators and industry to pause and assess the lie of the land.
“Efforts must focus on striking the right balance between innovation and protection to avoid frustrating people’s legitimate ambitions to own their own homes.”