The Financial Conduct Authority (FCA) undertook the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review (MMR) in April of this year. Afterwards, stricter legislation was imposed on lenders to make sure that those applying for a mortgage could actually afford it.
As part of the CeMAP training undertaken to attain accreditation, the students look at what constitutes affordability. Once qualified, part of the role is to complete a detailed analysis of customers’ income and expenditure, to establish whether or not they could comfortably maintain the repayments, both now and in the event of a future rate increase. Getting to know your customer is vital in making sure that the correct mortgage package can be put together and recommended.
Following the MMR, the number of mortgages being approved slowly rose, and Paul Smee of the Council of Mortgage Lenders revealed that the impact was actually more subtle than had been anticipated. He added that home movers as well as first-time buyers continued to be key drivers in the growth of the market.
With it having a less dramatic impact on the market, mortgage advisers continue to be busy. As long as the borrowers have adequately prepared, have looked at their budget and deposit, and are being realistic in their expectations, it should not overly affect them either. It is part of the role of a mortgage adviser to correctly manage their customer expectations, and to make sure that they fully understand the contract they are entering into.
Since the financial crisis of 2008, when house prices peaked, they came down a little and have been steadily increasing over the last couple of years. With house prices being higher, the deposit required is higher, making it harder to apply for a lower loan to value (LTV) product. When combined with the cap of 4.5 loan-to-income ratio set by the Government, along with the extra affordability restrictions that were enforced, it was felt that the higher LTV lending may quieten down, which would have an obvious impact for those working in the mortgage advice industry.
The legislation surrounding mortgages and the practice of selling mortgages is ever changing. As things are continually monitored and reassessed by regulatory bodies such as the FCA, the situation can change at any time. Working as a professional in the mortgage field, you have a responsibility as well as a duty of care to your customers to make sure that you keep yourself abreast of any changes, so that you can work ethically and within the regulatory guidelines.
So in conclusion, whilst the MMR did bring about a number of new changes to policies and interview structure, overall it has not meant that there is less work for mortgage professionals. In fact, the additional stress tests that need to be conducted as part of the affordability calculations, along with the range of products available to borrowers, means that more people are seeking advice when it comes to buying their first home, or even simply moving home. They want to feel comfortable with the big commitment taking a mortgage brings.