The government has not carried out an assessment of the effects changes to the rules on mortgage affordability have on borrowers.
Economic secretary to the Treasury Simon Kirby told Parliament there is no evidence these rules have prevented creditworthy consumers from obtaining a loan.
He was addressing a question by Labour MP Steve McCabe who wanted to know what steps the had been taken to help those seeking to remortgage but who, following the Mortgage Market Review, no longer met mortgage affordability requirements.
In response Mr Kirby said: “The government is committed to increasing competition in banking and creating an environment in which firms compete to offer a range of products that suit the varying needs of their customers.
“Both existing and prospective mortgage borrowers may benefit from shopping around to find the best deal available to them.
“The government has not undertaken a formal assessment of the effects that the Financial Conduct Authority rules on mortgage affordability assessments have had on the ability of borrowers to switch providers.
“In May 2016 the FCA published a review which assessed the impact of recent changes to the regulation of mortgage lending. Where lending is affordable, the FCA did not see evidence that the responsible lending rules have prevented creditworthy consumers obtaining loans.”
The introduction of the MMR rules led to concerns that borrowers would be trapped in their existing deal and unable to switch.
This is often due to weak loan-to-value, prior self-certification, interest-only, self employment or having “credit blips” in an otherwise good mortgage payment record.
Despite the FCA’s claims that there was any obvious problems surrounding this issue, research for the Association of Mortgage Intermediaries revealed 86 per cent of brokers think this is an issue.
