The FCA says lenders are being inflexible over allowing borrowers to port their mortgage following the introduction of the Mortgage Market Review.
Speaking to Money Marketing six months on from MMR implementation, FCA director of mortgages and consumer lending Linda Woodall says lenders are continuing to apply full affordability checks to borrowers who want to transfer their existing mortgage to another property.
Under the MMR, full affordability assessments are not required for such deals where no additional lending is required.
Woodall says: “We are seeing instances of difficulty when it comes to borrowers porting mortgages and we are not really sure why. It is baffling.
“It is for lenders to decide based on their criteria but there may be a degree of inflexibility.”
She adds: “At this stage we are merely observing but we could intervene if the practice becomes statistically significant.”
The regulator argues the new rules have resulted in just 15 minutes of additional work per case for brokers. Woodall says while some lenders installed complex processes following implementation of the MMR, “if you talk to mortgage brokers, it was taking them another 15 minutes per case because that is what they do”.
Woodall also says borrowers are no longer experiencing the lengthy delays in seeing a branch adviser that were widely reported in the immediate aftermath of the MMR. In some cases, borrowers were told they would have to wait up to five weeks to see a branch adviser.
But brokers say Woodall is overplaying the initial success of the reforms. Your Mortgage Decisions director Dominik Lipnicki says: “I disagree with the FCA on the point about application times but it is not just putting the cases through that is taking longer. It is harder to get cases completed now – the affordability calculators and how many knockbacks you have all add up to more time to place the deal.
“Of course, it depends on each case but an average of 15 minutes extra is certainly not the case.”
Perception Finance managing director David Sheppard says: “If waiting times are down and banks are handling the increased volumes more easily, why are they looking to open up more to the broker channel and why is the Association of Mortgage Intermediaries forecasting that the direct-only channel is in a period of continued decline?
“Waiting times certainly do not appear to have curtailed from what we have seen.”
Linda Woodall on…
- …porting: “We are seeing instances of difficulty when it comes to borrowers porting mortgages and we are not really sure why. It is baffling.”
- …extra work for brokers: “There has been a range of responses, with some larger players putting in place more complex systems, but if you talk to brokers it was taking them another 15 minutes per case as that is what they do.”
- …branch appointment delays: “Having got over the line with the MMR, there were some teething problems – people were finding delays in getting appointments and some of the conversations in-branch seemed beyond what the MMR was calling for… The logistical side is much better so people can get to see an adviser quickly now.”