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Mortgage industry fears regulation change

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Both mortgage lenders and brokers feel that lending levels could fall when new European regulations hit the market.

Research conducted by the Intermediary Mortgage Lenders Association found that the majority of the industry believes the EU Mortgage Credit Directive could damage lending in the next year.

In total 74% of mortgage brokers and 71% of lenders believe this could be the case, the trade body found.

It said many of the changes required by the directive were technical and would merely increase the cost of providing mortgages to borrowers.

Both brokers and lenders believed changes, such as the replacement of the UK’s Key Facts Illustration document (KFI) with the European Standard Information Sheet (ESIS), will offer little benefit for consumers.

The last wave of regulation – the Mortgage Market Review (MMR) – was introduced in April 2014.

Other areas of concern were a lack of suitable products, with 25% of mortgage brokers unable to find suitable products for standard mortgage customers.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said there were many challenges facing the industry.

“The mortgage market has recently undergone a series of major adjustments, and the industry is once more facing a collective challenge to remain open for business while getting to grips with the latest changes to working practices,” he said.

“It has been encouraging to see life returning to the market as this year progresses, and sentiment is about as positive as we have seen at any point since the MMR was introduced. The changes may be more of a technical nature this time round, but we must hope that the transition to the MCD rules does not weigh down too heavily on activity in the months ahead.

“Every new layer of regulation brings a danger that it will upset the balance between protection and access for consumers with legitimate cases to be granted a mortgage, as well as imposing extra costs and reducing efficiency.”

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