Following the surprise decision by the UK to leave the EU, it will be interesting to see how the UK mortgage market reacts, in particular will it follow the European framework and guidance for advice?
With the EU Mortgage Credit Directive barely out of the wrapping, what will stay and what will go. Here are some thoughts on areas that could change.
1: The ESIS – European Standardised Information Sheet. This document has replaced the Key Facts document given to clients and the layout can be a little cumbersome. Finding the purchase price/property value can be a hunt and perhaps the simpler Key Features Illustration (KFI) or KFI + (extended version of KFI) was sufficient. With the U.K. Soon not having to follow EU regulation, there is a good chance this document will go and the KFI will remain.
2: 7-day binding offer – This is a good introduction, as it stops banks from moving the goalposts post offer. It should remain in place, although lenders need to make the process of accepting the terms clearer, as still some confusion here.
3: Foreign Income Mortgages – although lenders can offer this, many decided not to offer the chance for the client to switch currency on their mortgages, which also meant they could not accept clients who had all or some of their income in a non-Sterling Income. A return to the more sensible approach and making greater allowance for currency fluctuation would be welcome, particularly in London.
There are always other areas that the UK mortgage market should consider, interest only being one example but the above three areas are the ones that have proven to cause the biggest issue, since Mortgage Credit Directive (MCD) arrived.
With the official exit not yet announced, eyes will be on the FCA and the direction they want the mortgage market to turn.