The impact of recent regulatory changes, the UK’s ageing population, total household debt and the need to maintain a competitive market were all issues addressed by Christopher Woolard, the Financial Conduct Authority (FCA)’s director of strategy & competition, when he addressed the regulator’s mortgage conference in September 2015.

He began by stating that the issue of home ownership was of critical importance to many people in the UK.

Next, he turned his attention to the effectiveness of the FCA’s Mortgage Market Review (MMR), which was introduced in 2013 and brought about some significant changes in the regulator’s mortgage rulebook. Since the financial crisis of 2007, and the reckless lending that precipitated it, he said the mortgage industry’s appetite for taking risks had reduced greatly. He acknowledged that MMR and other developments had made for a more tightly regulated mortgage market, but remarked that mortgage approvals had actually risen following the introduction of MMR, rather than falling by 20% as some commentators had suggested.

Mr Woolard did however acknowledge the need “to remain sensitive to the impact of these reforms over the long run”. With this in mind, he announced that the FCA would be conducting a market study in early 2016 looking at barriers to competition in the mortgage sector, and at the impact MMR has had in this area.

After acknowledging that there was no easy solution to the problem of providing sufficient affordable housing, the FCA director turned his attention to the issue of an ageing society. He remarked that in the UK and Europe, consumers were much more unlikely than their counterparts in the USA to make use of equity release schemes in order to unlock the value of their home. Mr Woolard made reference to the potentially high costs of equity release, and the fact that this type of lending had acquired a bad reputation. “In the not too distant past, equity release became a dirty word,” he said.

Mr Woolard said he wanted to open a debate with the industry and with consumer groups about the equity release issue, acknowledging that there were a great many asset-rich, cash-poor pensioners in the UK today who could potentially benefit from this type of arrangement.

Regarding household debt levels, he said that while mortgage interest rates remained low, many households were taking on additional forms of debt. “Less affluent groups are looking, in increasing numbers, to sources of non-mortgage debt for borrowings” commented Mr Woolard.

In the last section of his speech, he spoke of the need to ensure regulation did not stifle competition, and commented that six large lenders still enjoy an 80% share of the mortgage market.

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