In April this year new lending rules were introduced which were designed to regulate the mortgage market and introduce greater consistency and clarity into the ways in which the terms of mortgages are set out and how they are offered to consumers.
The Mortgage Market Review (MMR) was implemented on 26 April, bringing with it a number of regulatory changes and amendments, including the need for customers to satisfy lenders that they can afford a mortgage with evidence of income and expenditure, that interactive sales (for example face-to-face and telephone transactions) must be advised, that non-advised sales are not allowed except under certain circumstances and that mortgage advisers who are acting as intermediaries when selling policies, must gain professional qualifications in order to practice.
Naturally, given the immediate effects that mortgages have on the personal finances of the majority of households across the UK, the majority of the media’s attention has been focused on what the MMR will mean for consumers – particularly the more stringent lending criteria – and the effect that it will have on the UK’s largely booming housing market.
However, significantly less attention has been given to the perspective of the other side of the industry – namely the professionals and organisations which will be responsible for assessing the viability of their customers and adhering to the regulatory changes regarding qualifications which have been introduced.
Nearly six in ten (57 per cent) of mortgage advisers said they think MMR will be a success and will allow the majority of customers access to the mortgage market
The Institute of Financial Services, who are the providers of the industry’s benchmark qualification, the Certificate in Mortgage Advice and Practice (CeMAP®), wanted to address this and discover how professionals operating within the industry view these changes and how they believe they will affect the mortgage market.
Accordingly, the Institute conducted research among nearly 700 of its students who had recently completed CeMAP® in time for the implementation of MMR from a variety of organisations, ranging from small independent mortgage advisers to large well-known financial services companies, spread throughout the UK.
Encouragingly, the research reveals that majority of mortgage advisers believe that the Mortgage Market Review (MMR) will be successful in its overall aims of reforming the mortgage market in favour of consumers. Nearly six in ten (57 per cent) of mortgage advisers said they think MMR will be a success and will allow the majority of customers access to the mortgage market. Among the reasons for their confidence in the future success of the regulatory changes, mortgage advisers pointed to the promotion of a more responsible lending culture, greater fairness and consistency in lending criteria and bringing greater stability to the sector.
Among other reasons cited for its potential success, the mortgage advisers suggested that it will provide a more accurate picture of personal finances to would-be lenders, promote a culture of stability and security in the mortgage market, provide customers with the professional advice they need and improve the quality of advice on offer.
Beyond these initial benefits, the students also hinted at wider benefits which the changes may bring. These include advisers themselves looking to increase and diversify their skillsets. More than half (55 per cent) want continue studying, with more than a third (37 per cent) already taking advanced mortgage qualifications, over and beyond what is required from them. Added to this, many are taking wider qualifications in areas such as financial planning, brokerage and insurance.
One such adviser is Janine Davis, a Mortgage Specialist with Ulster Bank, who completed CeMAP® within the last six months and is looking to continue her studies. She told the Institute:
“2014 has seen huge changes introduced to the Mortgage Market, which ultimately seek to protect the consumer and ensure they get access to lending which is both fair and affordable.
“As part of these changes I was pleased to gain my CeMAP® qualification, which will allow me to provide a greater depth of advice to my customers and to demonstrate my commitment to professional development and career progression. With that in mind I am already looking to study for the more advanced Diploma in Mortgage Advice and Practice (DipMAP®).”
While there has understandably been concern among consumers and lenders about the effects of the MMR – as there often is with any significant regulatory change – the research conducted by the Institute of Financial Services reveals a largely positive picture, in which mortgage advisers can see the benefits offered by the changes and the opportunity to increase their professional skills through qualifications. All of this will ultimately be to the benefit of the industry and the consumer.