Lenders ‘filled their boots’ before MMR

The FCA says lenders “filled their boots” on sales with no income verification in the build up to the Mortgage Market Review this year.

Delivering her keynote speech at the Financial Services Expo London last week, FCA mortgage policy manager Lynda Blackwell says product sales data for the second quarter of 2014 show a significant increase in the number of loans where income was not verified. The MMR requires lenders to verify income in all cases.

She said: “Just ahead of the MMR coming into force we saw an increase in the number of mortgages where income wasn’t verified with 20 per cent of mortgage sales in Q2 – that’s around 50,000 mortgages sold without income being verified, up from 16 per cent in Q1.

“So it looks as if there was a bit of filling of the boots going on before everything was switched off.”

Blackwell said it was still too early to assess the impact of the MMR.

She said: “It’s probably going to take at least six months before we have clear water and can have a real good view on the impact of the MMR.”

Council of Mortgage Lenders head of member and external relations Sue Anderson says: “Borrowers who sought to obtain income non-verified mortgages may have wished to apply for their mortgage before the new rules took effect, so  that they were already in the application pipeline.

“It would hardly be surprising if borrowers with more complex sources of income may have anticipated greater difficulty in being able to meet the income verification hurdles after the new rules took effect. That is not necessarily the same thing as lenders actively seeking to increase their business volumes in the sector in advance of the new rules.”