FSA does not want “crude ban” on interest-only By Sarah Davidson


the future of interest-only mortgages seems safe after Sheila nicoll, director of conduct policy at the Finan- cial Services authority, an- nounced “a crude ban” was never intended on interest only. Speaking to lenders at last


month’s council of mort- gage Lenders conference in London, nicoll said the regulator was just reviewing how interest-only loans were made. “You only have to read the


consultation paper to see that a crude ban on interest only was never our view,” she said. She added that a “myth”


had sprung up around inter- est only and the regulator had been wrongly accused of “threatening to beat interest only out of the market”.


Sliding into winter, the outlook looks mildly positive


by Robert Sinclair director AMI


the bigger economic pic- ture looks mildly positive as unemployment stays well within economist models. although inflation is out of target, it appears there is lit-


She said: “our discussion


paper simply suggested that affordability could be better assured if each assessment was made on a capital and interest basis and there was broad support for this. “But a number of indus-


try voices had indicated that the problem with interest only went further and they encouraged us to wave our magic wand and apply ad- ditional measures going as far as possibly making new interest-only lending disap- pear. “our July consultation


asked in a very open way for further thoughts on what those measures might be in- cluding whether any action was necessary at all beyond our basic affordability re- quirement.” this year several lenders have tightened criteria on


tle appetite in the monetary Policy committee to address the issue now. most feel it is a broader


world commodity prices is- sue, rather than inflation being driven by domestic monetary issues. thus we are likely to see sustained low interest rates for some time and therefore a muted remortgage market. it is up to us as brokers to stay close to our clients and ensure they only remortgage at the right time for them. Following my visit to the


treasury Select commit- tee, andy Love mP is taking up the cudgels and looking to ensure that the mortgage market review is given ap- propriate scrutiny, early in its development. doing this be-


interest-only mortgages in an apparent move to reduce this type of lending. Lloyds Banking group was the first to retract, limiting interest- only lending to properties below £500,000. Speaking at Sesame’s


London symposium in mid november, Paul Howard, head of corporate accounts for nationwide, and Kevin Purvey, head of intermediary at Lloyds-owned chelten- ham & gloucester, said they saw a future for this type of mortgage despite indi- cations from the FSa that all mortgages could become repayment-based post mmr. Howard said: “i hope we


don’t talk ourselves out of interest only because the market would be poorer for it. there are clearly some for whom interest only is a very


fore we get final rules is most helpful. ami will be doing some work in the new Year to ensure more mPs are briefed on the issues. For those who got to mort-


gage Business expo, it was good to see so many brokers in good heart and still man- aging to operate viable busi- nesses. We have reached the bottom now and things will continue to gently improve. there will be times when it looks as though it is getting worse again, but this is always the case during a recovery. i was fortunate to be invited


to the SHiP awards lunch last month. equity release remains a specialist back- water. i remain convinced it will become more main- stream in years to come, and


sensible way of funding their mortgage. “i see a bit of a consensus


developing in the market – there have already been a number of adjustments to lenders’ requirements and criteria. i hope that we’ll reach a consensus that says this is the level where every- one is happy with interest only, and that the FSa looks at that and is comfortable with that as well.” c&g’s Purvey added: “the


market is still there for inter- est only. i think what we’re saying is that people under- stand the information they should have. “it’s also important to note


that interest only is still un- der consultation and it’s right and proper that we re- view and ensure that people have adequate means of re- paying their mortgages.”


those building new business models should consider this as part of their offering. it is a good route into looking after the wider family, by do- ing a good job for the older generation. i was also privileged to lead


a delegation of european mortgage intermediaries to meet with the commis- sion in Brussels. arranging consensus between French, Belgian, dutch and austrian representatives made dealing with issues with uK lend- ers seem a little easier. it is good to know however that across europe there are large groups of brokers doing the same jobs with many com- mon concerns. We will be continuing to work in this area in 2011.


mortgage introducer DECEMBER 2010 5


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44