HM Treasury is backing a rent recognition programme to help consumers with credit and affordability issues access the mortgage market.
Speaking at the Westminster Business Forum yesterday (July 10), Matthew Kershaw, head of mortgage lending and Help to Buy at HM Treasury, said advances in technology could help fintech companies develop rent recognition technology and that the Treasury wanted to push this agenda forward.
Rent recognition technology — and the acceptance of that technology in the financial services world — would help millions more consumers access credit.
The Treasury stated millions of families were living in rented accommodation and not getting access to loans because currently, a history of meeting their rent payments on time is not reflected in their credit score.
At the start of 2018, the Treasury offered fintechs a £2m prize fund to develop rent recognition technology and announced six winners — Bud, Canopy, Credit Ladder, META Labs, Movem and RentalStep — in March of last year.
Yesterday Mr Kershaw told the conference the Treasury was "keen to continue to work closely with the winners" to push this agenda forward and work through the "complexities and innovation" in order to support consumers.
He said: "We’re keen to support fintechs to develop the tech required to allow tenants to record and report their rental payments to support their credit marker and access financial services such as mortgages.
"A lot of this will really benefit from recent advances such as open banking and data sharing."
Last month the Financial Conduct Authority stated it was concerned mortgage lenders could over-lend or under-lend due to a lack of substantial credit data, stating that 5.8m consumers had limited or no credit history.
In its paper on the credit market, the FCA noted the credit information market was undergoing a period of significant change with the introduction of initiatives such as open banking or the Rent Recognition Campaign.
David Hollingworth, director at L&C Mortgages, thought the move towards a space where rent payments could be recognised for mortgages was positive and could help first-time buyers and those with thin credit history onto the housing ladder.
He said: "One thing that is very frustrating for first-time buyers is that they feel they are paying more in rent than they would do on the mortgage they would like to get, with their rent payments adding little value to their prospects.
"Looking to the future, if you could use your rent history to help the decision over affordability then it would be a real step forward."
Mr Hollingworth added that the Treasury backing the movement was positive as it would help give the green light from a regulatory perspective.
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