In Focus Risk
Looking to the future in Scotland
Regulators need a detailed understanding of the mortgage market, but should avoid micro-managing it
Paul Smee Director general, the Council of Mortgage Lenders
paul.smee@
cml.org.uk
The Financial Conduct Authority’s (FCA) mortgage market study has recently resulted in significant levels of data being requested from lenders. I appreciate why the FCA feels the need to look at how distribution is working and would rather they did it now when things look benign, than in five years time when they have concluded that things were going wrong. Lenders always knew there would be an
onerous request for data, but even we are surprised at how much is being sought. In our view, the FCA is asking for far too
much data from lenders, far too quickly. I hope they may reflect and refine this to
a slightly more proportionate approach. I also hope they do not get very granular with their report. Micro-management of markets, even in the name of competition, does not usually work. Let us stick to big themes and where there is palpable detriment.
First-time buyers Our latest figures show a Scottish market which is down, but only marginally, on last year, but where first-time buyer activity has shown a healthy increase. There has been a less healthy decrease in movers. The impression of a flattish market overall,
with a buoyant first-time buyer sector, is replicated elsewhere in the UK, especially once you leave the special case of London. The absence of moving activity is
something which should give us all pause for concern. Indeed, we are going further and have commissioned research to report by mid-year on the reasons why the number of transactions seems to be in secular decline. The Help to Buy banner has proved effective in stimulating new build. We will
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monitor closely whether the market can cope without the stimulus, but the evolution of the product and gradual tightening of availability in Scotland over time has been an intelligent way forward. Lenders will work constructively with government to make the transition into a post-Help to Buy environment as smooth as possible.
Brexit Alongside the end of Help to Buy, the exit from the European Union may affect the industry, but the impact on the housing market may be modest. It is not easy to identify specific impacts
on the mortgage market. It is a domestic market. There are no particular activities which will become impossible should we leave the single market. We will be asked whether our propensity to lend to EU nationals is affected by Brexit. I am confident in saying that lenders will
treat their customers fairly and will avoid unnecessary dislocation to business.
www.CCRMagazine.co.uk
The impression of a flattish market overall, with a buoyant first-time buyer sector, is replicated elsewhere in the UK, especially once you leave the special case of London
The CML will be merging with other trade
bodies in mid-2017, and the mortgage industry will remain strongly represented throughout the UK. The quality of mortgage representation, data, and voice will not be compromised by the change, and the new product council will offer the same sort of home for all types of mortgage lender which CML does today. CCR
Edited from an address given to the CML Scotland annual lunch.
April 2017
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