Brokers believe a rule in the European Union’s mortgage credit directive that would make mortage offers binding will actually benefit borrowers despite warnings from the regulator the rule will create huge delays to the sales process.
The directive states that “member states shall not allow a creditor to terminate a contract on the grounds that the information provided before the conclusion of the credit agreement was incomplete.”
Speaking at the Financial Services Expo in London last week, FCA manager of mortgage policy Linda Blackwell said the rule would mean lenders would have to obtain more information from the borrower as a result.
Blackwell said: “Lenders are going to be taking a much closer interest in the questions being asked and brokers may find themselves having a greater information gathering role.
“This could amount to a far more significant delay in the sales process than the separate new directive requirement for a cooling off period.”
But London & Country associate director of communications David Hollingworth says: “The implementation of this is key. On the upside it gives certainty to consumers by removing the potential for lenders to withdraw offers.
“Lenders want to be completely sure they have collected all information from the borrower but that kind of robust process is already under way.”
Chadney Bulgin mortgage partner Jonathan Clark says: “The possible adoption of a rule that makes mortgage offers binding upon lenders should be good news for borrowers as long as it does not unduly extend the application-to-offer times.
“With credit and background checks these days and the technology that is used, lenders should find this easy to implement.”