UK mortgage lenders braced for new cooling measures

UK mortgage lenders braced for new cooling measures

Earlier this year, the new Mortgage Market Review (MMR) conditions, which required lenders to look at more in-depth affordability factors before approving mortgage applications, shook up the mortgage sector. And now it seems that lenders are bracing themselves for another round of interventions from the Bank of England moving forward. 

The MMR regulations have been seen as something of a positive for the property sector, largely because it helped to cool lending, meaning that banks were giving loans on a more sustainable basis. This is credited by many as keeping the threat of a property bubble at bay. 

And the success of this rule change could mean the Bank of England’s Financial Policy Committee (FPC) acting again, according to lenders. In the latest survey from the Intermediary Mortgage Lenders Association (IMLA), 55 per cent of intermediary mortgage lenders and 40 per cent of brokers said that they are now anticipating a new wave of intervention. 

It comes at a time when the property market is also set to welcome a new wave of rules. Later this month, lenders will need to start checking that any borrowers are able to handle a three per cent interest rate rise as part of a stress test. 

There will also be a 15 per cent cap for lenders on the volume of new loans above 4.5 times loan to income.

The survey shows that mortgage lenders believe the Bank of England is remaining vigilant in its bid to make sure the property market does not get out of control, which can only be seen to be a positive for the long-term future of the sector.

"These findings show the industry is well aware that its recovery will be closely monitored in the interests of maintaining economic and financial stability. The announcement that the FPC is considering loan to value limits shows it remains vigilant," said Peter Williams, executive director for the IMLA. He added that the MMR regulations from earlier this year had already had a sizeable impact.