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Reuters

Britain’s financial watchdog said on Wednesday it had begun a review of the £1.3 trillion (HK$15.3 trillion) mortgage market to see if there are areas where competition may not be working well or could be improved.
The regulator’s action comes when the British government is facing pressure over a housing shortage in parts of the country and rising prices have put home ownership out of the reach of many people.
The Financial Conduct Authority said it could be challenging for people to compare a vast array of home loans on offer with no consistent terminology for fees and charges. There were also concerns about the quality and suitability of mortgage advice.
The FCA is also looking at the impact of new rules it introduced last year, which require tougher checks by lenders on the ability of borrowers to pay back a loan.
“There is also anecdotal evidence, subject to much media interest, that some types of consumers are becoming unfairly trapped and unable to access more suitable deals,” the FCA said.
“We are keen to ascertain how prevalent this problem is, and the extent to which the regulatory regime, the way in which it has been interpreted by firms, or other factors have played a role,” it added.
Lloyds, Santander UK, Barclays and Nationwide account for more than half of Britain’s 7 million mortgage holders.
Conditions for granting a home loan have become stricter following the financial crisis. There are fears that higher interest rates could make it even harder for young people to buy their first property.
Paul Smee, director general of the Council of Mortgage Lenders, an industry body, said the review was an opportunity to look at the effect of regulation, as well as market practice, on lenders and their customers.
“It’s also essential in delivering the kind of environment in which reputable lenders of all shapes and sizes can thrive,” Smee said.
The FCA is aiming to gather views before launching any full-fledged market study next year. Its review covers a wide range of home loans, including lifetime mortgages, shared ownership, buy-to-let, second charge mortgages and bridging loans.
It will also scrutinise activities and relationships within the sector, such as between lenders, brokers, valuation services and estate agents to see if they inhibit choice.
 


Britain’s financial watchdog launches review of home loans competition

Lloyds, Santander UK, Barclays and Nationwide account for more than half of Britain’s 7 million mortgage holders. Photo: Reuters

UK home prices drop as mortgage approvals gain

Annual house price growth in Britain eased in February to the slowest in 17 months. Photo: Reuters

New powers eyed for Bank of England over mortgages

The British government is weighing the Bank of England's request to impose limits on buy-to-let mortgages. Photo: Bloomberg

Mortgage debt a threat to recovery, says Bank of England

British mortgages at high loan-income ratios have reached a record level and there are signs of a decline in banks' underwriting standards. Photo: Bloomberg

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