Should Mortgage Rules Be Relaxed to Help the Self-Employed and First-Time Buyers
The financial watchdog is asking whether mortgage rules should be more flexible to help older buyers, the self-employed and reliable renters get on the property ladder.
UK society has changed dramatically over the past decade.
There have been huge shifts in the way Brits live and work and when they retire.
Meanwhile, property prices have grown faster than wages, impacting affordability.
But has the mortgage landscape kept pace with this transformation?
Or should more be done to boost access to home ownership?
The Financial Conduct Authority (FCA) – the financial regulator that sets the rules lenders must abide by – has launched a review to find out.
It’s asking anyone with an interest in the mortgage market to fill out a wide-ranging survey (there are 37 questions in all) by September 19.
Questions touch on issues such as:
· Should it be easier to access lifetime mortgages?
· What changes would help the self-employed?
· Should the mortgage stress test be changed?
Some would-be buyers feel shut out
Some sections of society feel that the current mortgage rules are too inflexible.
Entrepreneurs and freelancers: Getting a mortgage can be more challenging if you’re one of Britain’s 4.4 million self-employed, especially if you’re not buying with someone who has a permanent salary.
Older first-time buyers: Property prices mean that many people can’t afford to get on the housing ladder until later in life. However, due their age, lenders may only be willing to give them a mortgage over a reduced time frame. This pushes repayments up, sometimes making them unaffordable.
Reliable renters: Some renters feel stuck between a rock and a hard place. Even though they have a steady income and good rental track record (and could meet monthly mortgage repayments), they can’t save enough for a deposit.
Finding the right balance
The UK currently has stricter mortgage rules for good reason: to prevent risky lending practices, protect borrowers and ensure market stability.
So any future changes must be sustainable (the 2008 financial crisis is still fresh in many people’s minds).
The FCA says: “We want a well-functioning mortgage market where all borrowers who can afford to repay can access the mortgages they need.
“This means enabling firms to offer products which are better tailored to consumers’ needs, while continuing to help ensure a sustainable mortgage market which maintains the core lessons from the 2008 crisis.”
Have your say
If this is a subject close to your heart, visit https://tinyurl.com/4a8bdjss and complete the online response form.
If you’re a first-time buyer looking to get on the market, contact us today.
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