Intermediary mortgage lenders have become the meat in a sandwich between the government and regulators, according to their trade association’s executive director.
Speaking to FTAdviser, Peter Williams from the Intermediary Mortgage Lenders Association, stated that for the last 12 months the industry has been trying to work out who and what to respond to, while trying to stay afloat in a “deeply competitive” market.
Having said that, he conceded that brokers have done quite well out of the Mortgage Market Review complicating things for consumers.
“It’s harder to get a mortgage now for many people, so this leads more and more to getting advice, with many lenders going fully intermediated and more banks entering the market,” stated Mr Williams.
A study published by Imla on the first anniversary of the MMR’s introduction backed up this assertion, showing that between the first quarter of 2014 and the final three months of 2014, the number of consumers using intermediaries rose by 20 per cent, while those going direct to lenders fell 6 per cent.
More concerning for the association is the implementation of the Mortgage Credit Directive in the UK next year, something which Mr Williams said “has to be done, rather than needs to be done”.
While most lenders have become clearer on their deadlines and realised that the impact of European regulation will not be as serious as previously thought, he still questioned whether consumers will actually be better served under the new regime.
As for lenders making use of the cross border possibilities opened up from next March, Mr Williams commented: “I don’t think the numbers will be significant in either direction [UK lenders moving into Europe or visa versa] due to the inherent foreign currency risk of moving into other countries, along with cultural, legal and tax differences.”
Last month, Imla’s latest outlook research found that just 5 per cent of brokers surveyed felt the MCD’s introduction of a second APR would benefit the UK mortgage market, while 70 per cent disagreed.
Similarly, the new Key Facts Illustration document along with the European Standard Information Sheet, was deemed not to be beneficial by 68 per cent of brokers.
Last week, the prime minister told the Conservative Party conference that his government would tackle ‘unfinished business’ with lenders, promising to build 200,000 affordable homes by 2020.
This is planned through the Starter Homes Initiative, where properties must be offered for sale at a discount of 20 per cent below market rates, at a maximum price of £450,000 in London and £250,000 outside the capital.
Mr Williams was “not convinced” by this particular pledge, stating that “lenders will have concerns about the quality of these new homes and the sites they are built on, so I don’t think this is enough to hit the home building targets the market requires”.
peter.walker@ft.com
