New measures to allow ‘mid-size’ lenders to compete with the mortgage giants are being unveiled by the Bank of England.
The Prudential Regulation Authority (PRA), which is part of the Bank, has published a series of options to make it easier for medium sized firms to ‘scale-up’.
Speed up approvals
The proposed changes would represent less complex regulatory requirements for many firms, and should speed up the approval process, the PRA says.
Lenders will find it easier to assess how likely a borrower is to default on a home loan, and how much they can expect to lose.
Last month, the PRA also published plans to allow smaller banks and building societies to compete in the mortgage market.
Positive impact on growth
David Bailey, Executive Director for Prudential Policy at the PRA, says: “Mortgages are one of the most important financial products in the country, and among the biggest decisions people make about their finances.
“The options set out in this discussion paper could have a positive impact on competition and growth whilst maintaining an appropriate level of resilience, and result in more people getting access to the finance they need to buy a new home.”
Amend restrictions
Recently, the Bank of England’s Financial Policy Committee (FPC) discussed loosening the limits of LTV (Loan to Value). This move would allow lenders to issue high LTV mortgages to more than 15% of their customers.
The FPC has recommended the PRA and the Financial Conduct Authority (FCA) amend the restrictions.