FCA mortgage and mutual sector manager Lynda Blackwell has hit out at critics of the MMR, arguing the rules are not responsible for preventing certain borrower types from obtaining finance.
Speaking at the Financial Services Expo in Glasgow last week, Blackwell argued that the availability of credit to self-employed, credit adverse, interest-only and older borrowers shrank in the wake of the financial crisis, not post-MMR. In fact, she said, lending to the over-65s had risen since the MMR.
Blackwell said: “The MMR came into play on 26 April 2014, although it is generally accepted that most lenders implemented the new rules long before that. And I don’t think, for credit adverse borrowers, there has been any perceptible impact as a result of the MMR. What happened to this market happened post-crisis, not post-MMR.
“That’s when lenders’ risk appetite changed dramatically and, actually, lending to the credit impaired has remained pretty consistent.
“It is hardly surprising that it’s a struggle – it is high-risk lending and lenders are wary of going there. It’s wrong to point the finger at regulation and the MMR when the pullback from this happened six years ago.”
Blackwell added that the situation was unlikely to change in the near future for these borrowers.
She said: “In the interests of ensuring a sustainable market in future, the MMR rules are not going to allow lenders to go back to the lax standards we saw pre-crisis.
“That means, however, that many of today’s borrowers’ choices are going to remain constrained as there is a mismatch between their risk characteristics and what’s actually available in terms of products.”
London & Country associate director of communications David Hollingworth says: “I agree that a lot of changes came pre-MMR but many of these were in anticipation of the new rules and we still had a massive step-change when they came in.
“There weren’t many lenders that sailed through the MMR transition without having to make further changes, and it became like night and day for some borrowers in terms of what they could borrow before and after the regulations and that cannot have been the intended outcome.”