The mortgage market appears to have had a run on sales of mortgages where the borrower did not have to prove their income, just before new rules were introduced banning the practice.
That’s according to the Financial Conduct Authority (FCA), which regulates financial services in the UK.
As of 26 April, new rules under the Mortgage Market Review (MMR) meant income had to be verified in every single case, with both self-certification and fast-track mortgages being effectively outlawed.
But FCA spokesperson Lynda Blackwell has said the latest product sales data for the second quarter (April – June) period reveals a notable spike in the sale of these products prior to the new rules being introduced.
Blackwell said: “Just ahead of the MMR coming into force we saw an increase in the number of mortgages where income wasn’t verified with 20 per cent of mortgage sales in Q2.
“That’s around 50,000 mortgages being sold without income being verified, up from 16 per cent in Q1. So it looks as if there was a bit of filling of the boots going on before everything was switched off.”
She also stressed that if fast-track mortgages were still available there would be “a real risk” they would be used for ‘gaming the income verification rules”.
Blackwell also stressed that the FCA is concerned that some lenders were not making use of the MMR transition arrangements which allowed them to move ‘trapped borrowers’ onto lower-rates without the need for the new affordability measures to be completed.
Lenders needed to treat their customers fairly and they could use the transitional arrangements to help out their customers, she said. However the FCA could not force lenders to make loans.
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