In a speech to the Council of Mortgage Lenders, Jonathan Davidson, Director of Supervision (Retail and Authorisations) outlined its position on the current mortgage market and how regulation, legislation, macroeconomics and demographics would all have an important impact on its future.

Mr Davidson confirmed the important role that would be played by regulation and legislation. Specific emphasis was given to:

  • The Senior Managers Regime (SMR), which comes into force for deposit-takers in March 2016.
  • The Mortgage Credit Directive, with firms implementing the provisions in the most efficient manner in order to work towards an ‘early switch on'.
  • The Responsible Lending Review where the FCA are considering, amongst other aspects of the market, how firms are treating existing customers wishing to refinance their mortgage when their existing deal ends, but cannot do so because they are prevented by the new affordability assessments.
  • The Mortgage Market Study - the FCA is interested in studying competition in the mortgage market. It has recently launched a Call for Inputs ahead of a possible study.

Mr Davidson also discussed the role of macroeconomics and demographics and the impact on the mortgage market through the problems of; the maturity of interest-only mortgages, the base rate rise and an ageing population, all of which should be addressed now, rather than adopting a ‘wait and see’ approach. Given the long-term nature of mortgage products, foresight is particularly important in the industry.

In conclusion, the FCA believe that good progress is being made in establishing one of the world’s leading mortgage markets, but important challenges for both the regulator and the industry remain, which ought to be tackled now.