MBE 2016: FCA ‘encouraged’ by return of credit impaired
The Financial Conduct Authority is ‘encouraged’ by the greater availability and cost of credit impaired mortgages.
Lynda Blackwell, the regulator’s mortgage sector manager, told brokers at the Mortgage Business Expo yesterday that there are more competitively priced credit impaired products – and since affordability rules have been strengthened this is good news for the mortgage market.
Credit impaired products now typically cost 3.9% at 90% loan-to-value, she added.
Blackwell said: “We are seeing a growing tolerance of poor payment histories, with some firms offering products to consumers with more recent arrears and multiple CCJs.
“We want to ensure that in future the number of borrowers struggling to pay from arrears and repossessions is considerably reduced, but at the same time we also want to ensure we continue to have a market where people, no matter what their circumstances, can enjoy access to mortgage lending when they can afford it.
“So it is encouraging to see greater product availability at more competitive prices for those who have run into a temporary difficulty and have shown that they can deal with the problem.
“The issue is all about ensuring affordability and the market focus does appear to be more on the light side of adverse credit with competition principally focused on price rather than criteria.”
Before the Mortgage Market Review was introduced Blackwell spoke of a different world, where one in 11 credit impaired borrowers were repossessed compared to one in 100 with no credit impaired history.
She added: “The biggest issue around credit impaired lending in the past was simply an inadequate assessment of affordability, and that’s been dealt with through strengthened affordability rules.
“Addressing poor underwriting standards should help ensure that credit impaired mortgages being taken on are affordable.”