A national mortgage brokerage network has welcomed the impact of last year’s Modified Affordability Assessments (MAAs), as newly released data showed the number of borrowers moving to a new lender using MAAs more than doubled in the wake of the FCA’s changes to the regime last summer
Stonebridge said the initiative by the Financial Conduct Authority (FCA), which enables lenders to support borrowers by reducing their mortgage term or porting mortgages to a more affordable lender, is a “boon for consumers” but said there is plenty still to be done to ensure borrowers benefit.
A freedom of information request submitted by Stonebridge showed that, between the introduction of the new rules in July and the end of last year, the number of remortgages arranged with a new lender using MAAs more than doubled: up 126% year-on-year to 9,664 from 4,275. By comparison, the number of product transfers that used MAAs in the same period barely moved, rising from 269 to 290. The number of separate lenders using MAAs increased from eight to 12.
Rob Clifford, chief executive at Stonebridge, welcomed the rise in MAA use but stressed that a massive opportunity remains, with “plenty of scope” for more home owners to benefit. He believes some borrowers will still be wrongly assuming they lacked options and would be better off taking their existing lender’s product transfer offer without taking advice, and said the industry may also still be adjusting to the new freedoms.
“When the FCA made this change last summer, MAAs struck us as a boon for consumers but more must be done to help them take advantage,” he explained. “MAAs are a game-changing opportunity for many homeowners, giving them much greater flexibility to lower their borrowing costs.
“There are many circumstances where homeowners fear affordability tests and wrongly assume they must stick with their existing lender. The trajectory of interest rates may be uncertain right now because of conflict but, as rates come down over the long term, guiding borrowers to better financial outcomes is going to become increasingly valuable to them.
“For many customers, taking the easy option and going direct to a lender without shopping around could prove to be a very costly mistake, and one they’re stuck with for years.”
Clifford urged advisers and lenders to become even more proactive in helping customers understand that they’re not necessarily stuck with their existing lender, even if their circumstances have changed.
