Mortgage Strategy Top 10 Stories This Week:
This week’s top stories feature Santander considering quitting the UK market, and the FCA calling on the government to lay out an acceptable level of mortgage defaults. Explore these developments and more below:
Mortgage rules may be eased to boost growth: Report
Regulators are considering easing mortgage rules to help first-time buyers, including higher loan-to-income limits and factoring in rental payments for affordability tests. Lenders welcome the move, arguing that restrictive rules hinder homeownership.
Chancellor Rachel Reeves has called for reforms to boost economic growth, while the Financial Conduct Authority plans to simplify lending rules to balance access to credit with financial stability.
FCA calls on Govt to lay out acceptable level of mortgage defaults
The Financial Conduct Authority has urged the government to define an acceptable level of mortgage defaults if lending rules are relaxed. FCA chief Nikhil Rathi warned that easing restrictions would lead to more defaults and called for a debate on parliament’s risk appetite.
While the regulator supports simplifying mortgage rules to boost homeownership, it rejects a return to “light touch” supervision blamed for the 2008 crisis.
The government’s push for growth is already reshaping regulators, with former Amazon UK head Doug Gurr appointed interim chair of the Competition and Markets Authority.
Santander considers quitting UK: Reports
Santander has denied reports that it plans to exit the UK market due to regulatory burdens, despite exploring strategic options. The Spanish bank, which serves 14 million UK customers, faces lower returns compared to key markets like Spain and Brazil.
While Barclays reportedly considered acquiring Santander’s UK business, talks fell through over pricing. Santander insists the UK remains a core market.
More homeowners explore equity release to fund retirement: LV=
More homeowners are considering lifetime mortgages to fund retirement, with 27% exploring equity release, up from 25% in 2023, according to LV=. Reliance on state pensions is declining, and equity release is emerging as an alternative.
Women prioritise flexibility and inheritance protection, while men favour trusted providers and high product ratings.
The Equity Release Council reports two consecutive quarters of market growth, with homeowners over 55 withdrawing £615m in Q3 2024. LV= emphasises the importance of financial advice in navigating equity release options.
Prices for average fixed rate deals continue to rise: Moneyfacts
Average mortgage rates rose this week, with two- and five-year fixes increasing by 0.05% to 5.52% and 5.30%, respectively, while some lenders also made price cuts. Major banks like Virgin Money, Santander, and HSBC adjusted rates, with some increases exceeding 0.30%.
Building societies also saw mixed movements, with Leeds and Coventry raising rates while Principality and Yorkshire made reductions. Moneyfacts notes ongoing market uncertainty, advising borrowers to consider overall deal value, not just the lowest rates, and seek broker advice for the best options.
PRA proposes easing capital buffers for smaller banks
The Prudential Regulation Authority plans to ease capital requirements for smaller banks to boost UK growth, responding to government calls to reduce business red tape. PRA chief Sam Woods says the move will cut costs without increasing risk and support the economy.
The regulator also aims to streamline data collection, reduce regulatory overlaps, and simplify climate-related principles. Additionally, it is exploring a ‘concierge service’ for foreign investors. This follows a similar pledge from the Financial Conduct Authority to simplify mortgage lending rules and support homeownership.
Pennycook confirms changes to leaseholder ownership rule
Housing Minister Matthew Pennycook has confirmed changes under the Leasehold and Freehold Reform Act, removing the two-year ownership rule for leaseholders seeking to extend their lease or buy their freehold.
The government pledged to act quickly on leasehold reform, with the new rules also banning the sale of new leasehold houses and hidden insurance commissions.
Handelsbanken appoints McDonald to head up intermediary business
Handelsbanken has appointed Steve McDonald as the new national head of intermediary business. With 12 years at the bank and previous experience at NatWest and in commercial finance, McDonald will oversee the bank’s expansion with intermediaries on residential and commercial mortgages across the UK.
He aims to strengthen the broker channel and raise the profile of Handelsbanken’s intermediary proposition as part of the bank’s growth strategy.
Stamp duty receipts jump: HMRC
Stamp duty receipts rose by 20% to £14bn between April and December, driven by higher transaction levels, according to HMRC data. The increase comes amid a surge in residential property transactions, with November’s figures showing a 19% year-on-year rise.
Coventry Building Society warns that stamp duty bills will rise further from April when thresholds are cut, significantly affecting homebuyers and first-time buyers. This expected increase in homebuying activity will coincide with industrial action from 4,000 Land Registry staff.
MAB mortgage applications jump 15% in Q4
Mortgage Advice Bureau reported an 11% increase in full-year revenue, reaching £266m, with a 15% rise in home loan applications in Q4 compared to the previous year. The company expects a 31% increase in pre-tax profits to £30.5m, driven by pent-up demand in the mortgage market.
While the number of mainstream advisers grew modestly by 1.2%, their productivity rose by 12%. The firm anticipates steady growth in purchase transactions and plans to onboard more advisers in 2025. It also expects organic growth and is exploring potential acquisitions.
