FCA mortgage manager calls for lender innovation

FCA mortgage manager calls for lender innovation

Mortgage lenders need to stop thinking in terms of borrowing and debt, and innovate to help more people of all ages get on the housing ladder, the FCA’s mortgage sector manager has said.

Lynda Blackwell, speaking at the Imla Great Mortgage Debate in London on 17 September, denied that a lack of products post-MMR was the result of regulation, saying: “As long as you can afford it, you can have it.”

Instead, she claimed an “industrialised” development process was to blame for some consumers struggling to find a suitable product.

Ms Blackwell said: “One of the things we are seeing in this market is the march to industrialisation by the bigger lenders who have a factory-style one-size-fits-all approach.

“There are firms out there who will lend into retirement. The lenders thought MMR was common sense: you should be able to afford to pay the sums you borrow.

“You see lots of good innovation in this market that struggles to get traction.”

Rent-to-buy could be one area of innovation that would prevent people having debt hanging over their heads, she added, saying: “We need to think more widely in terms of innovation so we are not just focusing on borrowing and debt.”

Charles Haresnape, the chairman of Imla and managing director of mortgages at Aldermore Bank, said the issue of lending into retirement would grow.

He said: “I worry about the people who are lending into retirement. That is a much faster-growing issue than we ever realised.

“The challenge for lenders is how do you assess income into retirement without giving investment advice.

“It puts a heavy responsibility on lenders to figure out what affordability looks like in retirement.”

The panel was also quizzed about the UK’s housing crisis and how it could be tackled. One of the issues Ms Blackwell raised was the number of elderly people living in large houses.

She said: “You get older borrowers who pay off their mortgage and sit quite happily in a very big house.

“Does there need to be thought given to try to encourage older people to move away and build appropriate housing for retired people in the right places?

“There is a big debate to be had about whether the government’s focus is in the right place.”

The Council of Mortgage Lenders declined to comment.

Adviser view

Sarah Fox-Clinch, director of Bristol-based Fox Davidson, said: “Innovation is particularly needed in the area of older applicants where lenders really need to start looking at how people finance their mortgages in older age.”