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‘Don’t blame MMR for risk-averse lending’

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.”

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  • Roger Collins 19th March 2015 at 9:03 pm

    No it wasn’t MMR that stopped lending on an interest only basis or lending into retirement, it was FSA/FCA reviews into the practices and lenders marooning customers for whom the products WERE suitable before the review by saying if the FSA/FCA are looking into these area, we need to protect ourselves from the risk of criticism or fine by dumping the whole product area.

    Rather than looking at the individual circumstances of the customer and putting controls in place to make sure that the products were suitable it is much easier (and safer) not to have an innovative product,

    It doesn’t matter if these would be worthwhile products for some customers, if you are over 75 or have a valid reason for interest only (or god forbid self-certification), it doesn’t matter because the lenders will not service you because they cannot risk the chance that any profit or more being eaten up by fines or poor publicity.

    This is now risky lending as the FCA may criticise or fine a lender if they don’t think a product area is suitable.

  • Dick Sprinkler 11th March 2015 at 9:17 am

    This woman is the perfect example of a regulatory theorist.

    Clueless more like ! I have never heard so much total nonsense – Lynda come down and meet some REAL clients you have singlehandedly made mortgage prisoners as a result of your regulatory meddling and interference.

    Only yesterday I met ANOTHER perfect example that flies of everything you say and don’t tell me you were not warned

    I challenge you – PROVE IT !