A warning has been issued over anyone with a mortgage over “new rules” coming to the UK. Santander, Nationwide, NatWest, Lloyds, HSBC UK and Barclays customers – at the so-called Big Six – have been told the Labour Party government could relaxed mortgage rules.
Mortgage rules could be loosened by the City regulator as it comes under pressure to increase economic growth and home ownership across the UK. The move to “simplify responsible lending” for property purchases is part of a range of proposals put forward by the Financial Conduct Authority.
In a letter addressed to Keir Starmer and his chancellor, Rachel Reeves, the FCA chief executive, Nikhil Rathi, said the regulator was “already working to remove unnecessary regulation”. “There is a risk that enabling people to borrow more will once again send house prices skyrocketing,” said Jonathan Moser, the chief executive of the London-based property management company Mo’Living.
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“That arguably risks leaving people exposed as they may have overborrowed and potentially overpaid. The government, along with regulators, should tread carefully. The theory is good but the practice could have unintended consequences.”
“We can never rule out firms having to pay redress for serious misconduct,” Rathi’s letter said. “However, through proactive management of issues, and improved coordination with the Financial Ombudsman Service, we aim to prevent further significant FCA-led consumer redress exercises.
“As part of that, we are considering reforms to the redress framework which may need legislation.” The FCA also aims to change law to try to prevent a repeat of mass compensation schemes for consumers such as PPI, according to reports.
Some experts say looser mortgage rules could lead to a further spike in house prices. It comes on the same day it was confirmed that the Bank of England will delay capital rules meant to prevent another 2008-style crash.