Discussing the fact that the biggest six lenders still hold a vast majority of the market share, she noted that there was a potential for smaller lenders to look to the 'fringes' of the market in search of business to those consumers who may fall short of the MMR affordability regulations.
She explored the possibility that these lenders could 'attempt to circumvent MMR regulation' and lend to higher credit risk, marginally credit worthy clients, and thus fall foul of FCA rules.
However she also said there was a real opportunity for innovation within the mortgage market, and revealed that the regulator would be looking into equity release hybrid products in 2014/15. Following the announcement that retirees would no longer be forced to buy an annuity in the 2014 budget from Chancellor George Osborne, there appears to be a need for innovation in the gap between mortgage and equity release products.
Blackwell acknowledged that intermediaries now faced a challenge in adapting to individual lenders' affordability requirements and that as the regulator had stepped back from its initially 'very prescriptive' approach, that she hoped common sense would prevail in deciding what consumers were asked as part of affordability checks.
Speaking overview of how the MMR had landed and its views on how lenders were coping, she said:
“Overall things seem to have gone as the market expected. There have been some IT glitches with some firms faring much better than others. The world has kept turning. Some lenders have clearly attracted press comment about the questions they are asking regarding affordability. [However] we wouldn’t have expected very much to change when it comes to lenders’ underwriting practices. Things [the MMR rules] haven’t really changed that much.”
