Regulator fiddling with MMR while Rome burns By Sarah Davidson the lack of funding and


regulatory uncertainty are the biggest threats to the mort- gage market, consensus sug- gested at January’s mortgage Strategy and regulation con- ference hosted by infoline. the event, chaired by clay-


ton eurorisk european sales director michael Bolton, saw experts across the market raise the still-paralysed mortgage securitisation markets and pending regulation from both the european commission and the Financial Services authority as areas of major concern. Buy-to-let was agreed to be


a small “chink of light” in an otherwise dark market. Bolton said: “the broad consensus


2011 – the year of confusion


by Robert Sinclair director AMI


the new Year has begun with many conflicting mes- sages. Political pressure on the banks to cut bonuses and lend more has been even more intense. However their threats of relocating either key staff, businesses or company domicile offshore has brought a sharp focus to the debates. in addition the ability to


audit lending actually done in various sectors remains problematic. as we in the


over the two days was that there is a lack of focus on the real issue in the market: the lack of funding. nero is fid- dling while rome burns. the FSa’s focus on the detail of the mortgage market review is unnecessary and irrelevant while the money markets re- main frozen. “Without functioning se-


curitisation markets there is no hope for the uK housing market to move on from cur- rent levels of transactions. it doesn’t matter how much poli- ticians jump up and down and tell banks to lend more and the FSa not to be too tight with regulation in the mmr - funding is the problem.” But speakers also agreed that the FSa did seem to be


mortgage industry know it is possible to manage demand for loans by arranging the loan to value, fee, interest rate and affordability dynam- ics without having to say “no” to applicants. there will be lots more politicking in this area but i would venture that it’s not an area i would want to spend time if i was paid by results. the economy continues


to point in different direc- tions. Sterling continues to strengthen but this is as much about the problems of the euro and the uS dollar as anything else. unemploy- ment remains lower than many economists expected but will keep ticking up- wards this year as the public expenditure cuts impact. inflation is the big worry


for many as it pressurises the monetary Policy committee to increase Bank Base rate.


less hurried to implement regulatory change that could hamper the market’s recovery than it appeared mid-2010. robert Sinclair, director of the association of mortgage intermediaries, said the FSa seemed to be “taking imple- mentation of mmr more slow- ly” than previously planned. after announcing in de-


cember that the approved per- sons regime will be delayed until 2012 – 2013, the FSa has suggested it will publish its policy statement on respon- sible lending in July 2011. But Suzanne macdonald,


head of the financial services regulation practice at tLt So- licitors, said she expected the FSa to announce it would de- lay this as well.


a quarter per cent in may is my prediction for the first shift with a second move in September. How much this will impact


on mortgage rates will be interesting as LiBor and SWaP rates have already been moving in this direc- tion. it could be another reason for banks to improve margins but there is time yet. the problem with


inflation is that it is being driven by commodity, tax and input price increases not an over-heating economy. it is already driving down consumption as we have stopped borrowing - and pay increases for many are negligible. the impact of petrol prices and Vat has yet to feed into consumption. Property prices are seeing


big regional differences with London and the commuter belt holding up, whilst the


“i suspect if the european


commission carries on apace with its consultation on re- sponsible lending (currently ongoing and due for publica- tion later this quarter) that the FSa will push back its own policy statement another year,” she said. Sinclair said the shift in at-


titude would trickle down to all levels of the mmr. “it’s in- teresting that the FSa is now appearing to be telling politi- cians that they have no time- table for mmr,” he told the conference. “i genuinely be- lieve that we will not now see the final rules and cost benefit analysis until we’re well into 2012 and i don’t think we’ll see much implementation un- til 2013.”


rest of the country is in decline. this looks like the story


for 2011 unless the first time buyer group is unlocked by the banks but with static or falling house prices, this is not a line the risk managers want to consider. mortgage funding having fallen from £146bn in 2009 to £136bn in 2010 is liable to repeat that range in 2011. unless something comes


along to encourage new money or more lending, anything over £140bn looks unlikely today but things could happen to make July onwards a different year. the mortgage market


is rising in profile with government ministers so we can perhaps expect a more balanced approach than the “need to protect people from themselves” philosophy delivered to date.


mortgage introducer FEBRUARY 2011 5


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