With claims that brokers are finding it increasingly difficult to place cases for credit adverse, self-employed, and interest-only clients, as well as those who wish to borrow into retirement, Blackwell said it is not the stricter regulation of the MMR which has affected these groups.
She acknowledged that lender appetite has changed significantly since the implementation of the MMR, with ‘improved standards and lending quality’, which she said was not a temporary change.
Blackwell 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.”
Referring specifically to the results of a study undertaken by IMLA in January, where a number of brokers expressed concerns about obtaining lending for certain groups of consumers, Blackwell was very clear that she thought it was not the after-effects of MMR being felt.
She noted that “There’s no doubt MMR has had an impact on the market, and the intermediary share of transactions grew to 62% by the end of last year”.
However, she added:
“MMR came into play on 26th 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 MMR when the pull back from this happened six years ago.”
Blackwell also commented on lending to borrowers going into retirement, and illustrated that lending to over-65s has actually increased post-MMR. She acknowledged, however, that future relaxation of lenders’ criteria – for example, to borrowers over a lenders’ upper age bracket - was limited by regulation, but argued that this ‘isn’t conservative lending, but responsible lending’.
Similarly, she painted a similar picture for interest-only, which is moving back to a niche product for wealthier borrowers as a result of lenders being more responsible.
Blackwell noted the importance of the intermediary in the market, and praised them for their work in a time when concerns about the market’s capacity are being raised.
She said:
“You are playing an incredibly important role in this market. The vast majority of consumers need help and support and they look to you for that. The real value you add is the extensive knowledge of each lender’s affordability rules.
“You can show the real value you can add in sourcing products for your clients.”
