Derek Inkpin from local solicitors Wiseman Lee reflects on how the mortgage market has changed over the last 50 years and why he is thankful the Financial Conduct Authority are doing their bit
When I first started work over 50 years ago, it could be tough getting a mortgage. Even if a borrower fitted the lender’s criteria, UK-wise, things were a lot tighter financially and mortgage lenders operated a strict allocation of funds so that if the lender’s funds ran out for a particular month, borrowers would have to wait until further funds were available for their purchase.
The courts were tougher too. Many years ago, a particular judge at Bow County Court in rent possession cases had an often repeated mantra to those appearing before him saying “No rent, no house,” so if you were in arrears with your rent, you could not expect much clemency from the judicial system, and that was pretty much the same for persons with mortgage arrears. Thank goodness things have changed for the better.
Fast forward to 2019 and the bank of Mum and Dad is open for business, and there are hundreds of mortgage products and many more people are able to get the mortgage they want to make home ownership within their grasp.
When Covid-19 struck, the world as we know it, in so many ways, was turned upside down. People’s finances were and continue to be thrown into jeopardy with a lot of financial worry. Thank goodness in 2020 the Financial Conduct Authority (FCA) has been issuing guidance to mortgage lenders so that borrowers who face financial difficulties arising from coronavirus can be helped.
This FCA guidance is advice to lenders to use short- and long-term options, which include altering the repayment duration of a mortgage, thereby reducing monthly payments, offering payment deferrals and other solutions so as to provide much-needed financial support at a very difficult time.
The whole point is that if borrowers need help, instead of facing the prospect of their homes being repossessed, lenders can give support tailored to the individual borrower’s circumstances to help them manage their finances. Lenders are also being advised to refer their borrowers for debt advice.
We are a long way from the Covid-19 situation coming under control and the headlines are worryingly full of indications that employers are apparently planning substantial redundancies for the UK workforce. At least the FCA are doing their bit to give advice to mortgage lenders to ensure the right kind of practical help is given to mortgage borrowers at this critical time.