Challenger Bank and Building Society APPG calls for the mortgage market to go Dutch
The All Party Group on Challenger Banks and Building Societies has called for radical reform of the UK mortgage market following an inquiry into the UK mortgage market.
The APPG invited panel of leading experts in mortgage policy to discuss the key issues in the UK mortgage market in the light of rising interest rates. With rates expected to rise further in 2023 the APPG is calling on the Treasury and the Bank of England to take radical steps to stop people losing their homes.
These include regulatory reforms to ensure that mortgage lending is based on affordability rather than arbitrary caps and ensuring that people who can afford to repay a mortgage are able to get one.
The APPG also argues that mortgage regulation needs to be streamlined under a single regulator rather than the current hotch-potch approach and the Treasury and regulators need to talk to a much wider pool of lenders rather than just the same big banks.
Commenting on the conclusions, Rt Hon Karen Bradley MP, chair of the APPG on Challenger Banks and Building Societies said: “Due to rapidly rising interest rates the UK housing market is at a turning point. We can either decide to carry on with the “business as usual” approach as people struggle with rising interest rates or do something different.
“In countries like Denmark and Holland consumers are not exposed to the vagaries of the financial markets when it comes to a mortgage on their home as many mortgages are at a fixed rate for life.
“The APPG is of the view that UK mortgage regulation needs a root and branch review with a view to introducing some of the protections common in other nations. There is also a need for greater competition in the mortgage market and a slimlined regulatory system under a single body.
“Why should UK consumers be uniquely exposed to market fluctuations when in the Netherlands or Denmark the public are protected by fixed for life mortgages? There must be, and is, a better way.”
Arjan Verbeek, the CEO of Perenna, who supported the roundtable added: “The UK mortgage market is broken and creates vulnerabilities for borrowers and the UK economy.
“As other countries have shown, there are better ways to design a mortgage system which protects borrowers from the vicious cycle of interest shocks and expensive re-mortgages, helps first time buyers onto the ladder, provides options to later life borrowers which is becoming critical as the UK continues to age, and, finally, support the retrofit challenge.
“As long as the government continues to listen to the same voices, nothing is going to change. The APPG is absolutely right to say the Treasury needs to consult more broadly.
“Many of the problems the UK mortgage market faces are unique. Other countries don’t have them. And there is absolutely no reason why we can’t get to that same place too.”