News Review
Advice is the battleground in MMR responses By Sarah Davidson
The Association of Mortgage Intermediaries locked horns with the Council of Mortgage Lenders to argue over the survival of non-advised sales following the MMR. AMI backed proposals to
make mortgage advice the default position for those looking to buy property while the CML was fighting tooth and nail to stop non-advised transactions being scrapped. Robert Sinclair, director of
AMI, said: “In supporting the principles and aims of MMR, we have been vigorous in ar- guing that it should not stifle innovation, choice and the ability to get on the housing ladder. “We are therefore fully supportive of the proposals to make advice the default position for all mortgage transactions, with an opt out for those confident they can execute it themselves. This division provides clarity and support for consumers.” But the CML said the defi- nition of advice was too wide and needed amendment. The requirement to give advice whenever there was “spoken
or interactive dialogue” would drag many borrowers who did not want or need advice into the process, it claimed. The CML said the Financial Services Authority needs to ensure a consistent approach with guidance which allowed dialogue to occur with bor- rowers without it necessarily being deemed to be advice. It also suggested the regula- tor needed to ensure advice proposals
only captured
those customer contact activi- ties undertaken by approved persons.
The Building Societies’ As- sociation sided with the CML saying the intended move to a fully-advised mortgage mar- ket and consumer reaction to the extra information that lenders would have to collect to assess affordability were a concern. Paul Broadhead, head of mortgage policy at the BSA, said: “The FSA is right to en- sure that vulnerable consum- ers always get mortgage ad- vice. That said to force other financially savvy consumers with previous experience to take advice, whether they want it or not, runs the real
Barclays, Lloyds Banking
Group, NatWest and vari- ous building societies have chopped loan to values for the product type severely in recent weeks.
Survival of the fittest
risk of detaching the appli- cant from both decision and process.”
The Intermediary Mortgage Lenders Association mean- while raised concern that a generation of twenty-some- things slammed by the failure of pensions, low employment opportunities, spiralling edu- cation costs and lower access to mortgage finance might “bite back”. Peter Williams, executive director of IMLA, said dis- content among twenty-some- things locked out of the hous- ing market by the MMR could spiral into “political action”.
Second guessing Meanwhile lenders have been second guessing MMR with many dramatically tightening up criteria on interest-only mortgages. Nationwide,
It comes after stricter pro- posals on repayment vehicles for interest-only loans and harsher affordability tests. The FSA also published a paper in March saying bor- rowers on interest-only loans without a repayment strat- egy in place are a ticking time bomb.
It said: “In the medium to long term, the outstanding balances, as well as the loans- to-value of these maturing mortgages, are expected to increase significantly. Con- sequently, both lenders and borrowers need to pro-ac- tively plan for the maturity of these mortgages. This issue, including the fair treatment of borrowers in this situation, is something that we will be monitoring closely.” FSA figures show that the
while Santander, sale of interest-
only mortgages rose sharply between 2002 and 2007 they now account for around 15% of regulated mortgage sales.
6 MORTGAGE INTRODUCER APRIL 2012
www.mortgageintroducer.com
R E S I D E N T I A L & B U Y T O L E T R E S I D E N T I A L & B U Y T O L E T GREAT BRITISH MORTGAGES.
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