As a result of the introduction of the Mortgage Credit Directive (2014/17/EC), the Council for Mortgage Lenders (“CML”) has announced it will be amending its lenders’ handbook on 1 February 2016. The CML Lenders handbook contains instructions for conveyancers acting on behalf of lenders in residential conveyancing transactions, and now accommodates the requirement for prospective borrowers to have a ‘reflection period’ of at least 7 days. The FCA were consulted on the amendment.
The reflection period is introduced through the Directive to allow borrowers to review their mortgage offer, make comparisons and assess the implications of taking the offer. Throughout the reflection period, lenders are permitted to communicate with the borrower, and the borrower can accept the offer, reject it, or allow the time to lapse.
The introduction of the reflection period will apply from any new agreement entered into after 21 March 2016. It is expected that the UK standard will be 10 days, or aligned with the existing offer expiry date (which can be up to 6 months).