Financial institutions urged to reduce mortgage lending rates
Alright, mate! Let's dive into the Financial Conduct Authority's (FCA) latest plans for the mortgage market, shall we? They've fired the Starting Gun on a consultation about mortgage rules, and it's all about helping consumers!
Sounds like the FCA wants to cut the overall cost of borrowing by slashing term lengths and providing access to cheaper remortgaging deals. They're gonna have a chat about how much risk lenders can handle and how they should take that chance to boost support for consumers.
Emad Aladhal, the FCA's retail banking director, said, "It's not just about the first step on the property ladder, we need a market that can serve everybody." He called on the industry to step up its game and get creative with the flexibility the FCA offers to generate real change.
The FCA's shouting match with the mortgage industry isn't new, though. In March, Nikhil Rathi, the regulator's main boss, told the Treasury Committee that Mortgage lenders have been holding back when it comes to stress tests. Rathi hinted that these lenders might be too cautious when it comes to interest rate stress tests.
Now, this price war between top UK mortgage lenders is getting fiercer, with banks competing like crazy due to falling interest rates. Barclays dropped two- and five-year fixed deals to 3.99%, triggering a mortgage price war with TSB, Coventry Building Society, Bank of Ireland, and Co-op Bank all following suit.
Meanwhile, the Bank of England's chilling at 4.5%, down from a post-financial crisis high of 5.25%, and the Monetary Policy Committee will make their next decision on May 8th.
The FCA's consultation paper wraps up on June 4th, after which, they'll sit down and have more discussions about the future of the mortgage market and mortgage conduct regulation in June. A discussion paper about the future of the mortgage market is planned for June as well!
In case you're wondering, the FCA's been working on this five-year strategy that's all about backing the government's mission for economic growth. So, this mortgage rule review is part of that!
Key proposals for the FCA review include simplifying the responsible lending and advice rules, amending mortgage advice and selling standards, adjusting affordability rules, and retiring old non-handbook guidance. The aim is to help consumers manage their mortgages better, potentially reducing costs and promoting financial planning.
Now, you might be thinking, what does this really mean for me? Basically, lenders might be more inclined to take some calculated risks to offer better deals, making it cheaper for consumers to get a mortgage or remortgage. So, keep your eyes peeled for some sweet mortgage offers, mate!
The FCA's mortgage rule review, part of a five-year strategy aimed at promoting economic growth, includes key proposals such as simplifying responsible lending and advice rules, amending mortgage advice and selling standards, adjusting affordability rules, and retiring non-handbook guidance. This aims to help consumers manage their mortgages better, potentially reducing costs and promoting financial planning, as lenders might be more likely to take calculated risks to offer better deals in the competitive banking-and-insurance industry. With the FCA's consultation paper wrapping up on June 4th, the future of the mortgage market and mortgage conduct regulation will be further discussed in June.
