U.K.'s Financial Conduct Authority (FCA) announced that it will review Britain's mortgage market to check how the tougher rules that were rolled out last year has affected homebuyers and the housing market.
Britain's FCA made the announcement Monday, September 7, through a mortgage market conference held in London, reports the site Estate Agent Today. Christopher Woolard, FCA's director of strategy, said that they are doing the review to avoid the return of "unaffordable lending practices of the past" wherein almost every loan application was approved. Woolard explained that the FCA needs to remain vigilant and alert on how banking institutions and firms are interpreting the rules that were introduced in April 2014.
The FCA executive also mentioned that part of the mortgage market study will be a review on the key aspects surrounding the implementation of the rules, also known as the Mortgage Market Review (MMR). Woolard added that the FCA will "remain sensitive" on how the reforms could impact the homebuyers and the housing market in the long run. He continued, "And we certainly need to keep focused on outcomes and whether the market is working well."
Aside from sharing the planned review, Woolard also mentioned that more competition in the country's lending market would also help the homebuyers, states Reuters. In his conference address, the FCA executive shared that 80 percent of Britain's home loan market was served by just six lenders. Woolard said, "If competition is functioning effectively, it should lead to lower prices, better consumer service and more innovation in the form of products that better address consumer needs."
The FCA's April 2014 Mortgage Market Review introduced tougher rules for potential home loan applicants to secure a new mortgage or re-apply for one, reports the Financial Times. The MMR required homebuyers to undergo a more tedious process to prove that they are financially capable to afford mortgage payments.
