Leader: Market's date with destiny
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This week we should find out what the Financial Services Authority’s thinking is on affordability, income verification and interest-only deals. The regulator is due to spill the beans in its latest Mortgage Market Review paper, the ominously titled Responsible Lending, which is out on Tuesday.
Which way the regulator will swing on interest-only is probably the easiest thing to predict. Several big lenders have already made concessions on the availability of interest-only, and it seems like lenders have been collectively sat on by the FSA. Lloyds Banking Group has limited it to loans below £500,000 and Platform has restricted it to advised sales. Tuesday’s paper should make the product’s future clear.
Likewise, rumoured caps on LTVs for the credit-impaired will map out the direction of the sub-prime market, and should clarify what will happen on income verification.
The credit crunch and the MMR have put paid to sub-prime and self-cert as products. But it’s vital that deals which cater for those with tarnished credit scores and the self-employed - both groups that have increased massively in number because of the recession - make a comeback at some point.
These types of customers won’t disappear because the FSA deems them an unacceptable risk for lenders to deal with. If we don’t want to push a large swathe of the country into the arms of loan sharks who learnt their trade in the baseball bat and steel toe-cap school of underwriting, products must be developed that offer some salvation.
Meanwhile, this week Mortgage Strategy has this week set up its own page on Facebook, and you can also still follow our tweets at www.twitter.com/mortgagestrat.
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