Every year brings new challenges and so far 2018 has proved a difficult one for some in the second charge market.
The FCA ruled last year that it would assess how the market operated given that second charge had come under its remit in March 2016. It chose several lenders to analyse and confirm they were complying with affordability rules as per the Mortgage Credit Directive.
In a ‘Dear CEO’ open letter, the regulator revealed that it had found incidents of lenders breaching these rules. It appealed to all lenders to ensure that affordability calculations were ‘at the heart of each lending decision’.
While the findings of the investigation may have cast a cloud over the second charge sector, in the long run the FCA’s intervention can be only a good thing for borrowers, and they and the industry can move forward from this knowing that lending practices are sound. After all, the regulator confirmed that all firms investigated were improving.
In our cover feature, one of those lenders investigated – Shawbrook – spoke out ahead of the FCA’s open letter to explain how it was handling the investigation.
The London housing market has also had a tough start to the year, depending on your perspective. House prices continue to stagnate in the capital as Brexit uncertainty, tax hikes for landlords and a decline in overseas interest for prime London all affect demand.
But many would argue that London’s house prices have been disproportionately high for far too long, with many residents unable to afford ever to buy a home. So there may be an upside if property becomes more affordable for first-time buyers. Either way, the market will survive.
And speaking of tenacity, the turnout for the recent Mortgage Strategy awards was truly remarkable, given the impact of the ‘Beast from the East’. It speaks volumes for the industry’s commitment to always deliver.
Thank you for coming, and for a fabulous night.