Karina Hutchins, Principal, Mortgage Policy, UK Finance, spoke at our May Conference and gave a comprehensive overview of mortgage policy over the last ten years and the impact this is having today on receiver appointment levels in a constrained mortgage market.
 
Key points
 

• Karina highlighted that the BTL market is much smaller than the residential owner-occupier, and that gross lending had been hit particularly hard in 2023. Arrears also more than doubled. However, possessions remained historically low.

 

• A triage of mortgage policy is responsible for arrears numbers away from the levels seen during the Global Financial Crash:

 
 

1. Mortgage Market Review (FCA introducing new affordability framework and responsible lending).
2. Stress testing (PRA introducing new way to calculate maximum BTL mortgages based on rental income).
3. Tailored Support Guidance (FCA introducing new guidelines for firms to help customers through the pandemic and cost of living crisis)

 

• As a result, a high percentage of those cases in arrears are mortgage cases arranged more than ten years ago. Likewise, possessions are almost all the same cohort of customer.

 

• BTL market showing some early signs of recovery in Q1.

 
 

• Inflation is coming down and wage growth is starting to rise. However, these early signs of recovery could be disrupted by external factors such as conflict in the Middle East and Eastern Europe.

 
The affordability tests, caution and robust polices have demonstrated sensible lending with resultant resilience; external geo-political factors nonetheless remain as potential disruptors.