The latest Mortgage Market Review paper struck a good balance between consumer protection and choice.
However, some areas will provoke further debate, especially verification of income, affordability assessment and the provision of advice.
The Financial Services Authority also notes that buy-to-let regulation is a matter for the government, which views this as inappropriate under the Mortgage Conduct of Business rules because it is a commercial activity and would not sit comfortably under a consumer protection structure.
Areas of the MMR make this more apparent than ever. Affordability in buy-to-let is driven by rental income, so most of the MMR proposals on affordability assessment and verification would be unworkable for buy-to-let – for example, looking at the borrower’s committed expenditure in relation to their ability to pay the mortgage.
The proposed control of interest-only lending would also be inappropriate for buy-to-let. These areas would need to be looked at solely from a buy-to-let perspective if ever applied.
But the threat from Europe still remains. The authorities have been unable to negotiate exclusion for buy-to-let and talks rumble on.
It has never been more important for us to make our voice heard. Our industry bodies are doing a great job keeping conversations alive and it will be interesting to see how things progress this year.