OK, I know the mortgage market isn’t always the most interesting subject, but this week in mortgage terms it really did ‘kick off’.

The FSA published their Mortgage Market Review which contained their proposals for the future of the mortgage market, and reflected their intention of a more obtrusive approach. So, here I offer a quick rundown of the points and my own take on their impact:

Banning ‘self-cert’ mortgages.

Up to 1 million of mortgages were arranged on a self cert basis. As I have mentioned before, if self cert is banned, then these people will be at risk of never being able to get a mortgage again, even when the market improves. So, unable to move OR remortgage, they are left to sell up or stick with their current lender.
Now, as most mortgage interest rates are low this may not intially be a problem, but as rates rise it will become more of an issue – some may be able to switch to a fixed rate (if the lender is gracious to offer a product transfer) but if you are with a lender who doesnt offer product transfers, or a lender who has left the mortgage market, then you will be at the mercy of those interest rate rises. In fact, the irony is that for someone stuck in this trap, it could result in mortgage arrears and ultimately being repossessed – and this will be a direct consequence of new regulation to protect the consumer!

Lenders will be required to hold more capital and liquidity.

This has certainly happened already and the effect is simple: fewer and more expensive funds available within the mortgage market.

Regulation to cover buy-to-let mortgages (and all lending secured on a home).

I haven’t quite got my head round the impact this may have. From a brokers point of view (which I have) most of our buy to let advice is treated as regulated anyway (best business practice etc), however it all depends on what impact it has on the lenders. For example, if stricter affordability practices are adopted, it could lead to even more restrictions on the number of buy to let mortgages anyone person can have.

Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay.

I can only imagine this is going to mean more comprehensive underwriting, which no doubt will lead to longer application time lines and possibly more rejections.

So lets get cliched here – where there’s a change there’s opportunity (and other such motivational ramblings), so if you have solid provable income, keep your credit clean and have access to cash deposits then now’s the time to take advantage of a market in flux.