These new regulations , which are set out in the EU Mortgage Credit Directive, set common standards that EU members need to meet in order to protect consumers taking out loans to buy a residential property. The government has already introduced a number of major reforms to mortgage lending, including creating new, stronger regulators with powers to ensure people only borrow what they can afford to repay, as well as tackle any future risks to financial stability from the mortgage market at a much earlier stage.
While Britain already complies with most of these new EU rules, the legislation implementing the directive contains some changes which include:. The government has intended to make this change for a number of years but chose to wait for these new EU rules to be implemented, in order to avoid excessive disruption to both lenders and customers.
Introducing a new set of regulations for buy-to-let lending, where the lending is to consumers rather than for business purposes. This is not expected to affect the vast majority of buy-to-let lending which is done for business purposes and is therefore not subject to the directive.
The changes will not come into effect until March , but the government is putting these in place now in order to give mortgage lenders and customers as long as possible to prepare for them. Read more about our statistics. Banking services The BIS offers a wide range of financial services to central banks and other official monetary authorities. Read more about our banking services. Visit the media centre. In this section:. Home Central bank hub Central bankers' speeches Logout.
Central bank hub. Central bank speech 02 October PDF full text 31kb. Mortgage Regulations and Access to Mortgage Credit However, even during this period of strong performance in the housing market, access to affordable mortgage credit remains a barrier to homeownership for some borrowers, due in part to regulatory burden. Michelle W Bowman. Top Share this page. Stay connected. Federal Reserve. Accessed June 30, Commodity Futures Trading Commission. Congressional Research Service. Federal Housing Finance Agency.
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Mortgage regulation brought some important changes for consumers. BBC News explains what protection mortgage regulation offers. What does regulation mean for me? Regulation should offer a better safety net for consumers. This is because anyone who wants to sell mortgages, from estate agents to mortgage brokers, must be authorised by the FSA or be part of an FSA-authorised network. In addition, they must adhere to a raft of rules governing sales.
Businesses that fail to comply with the new regime could be forced to stop trading, risk a fine or even a prison sentence. But the regulatory rules are not retrospective. They will only apply to mortgages and variations to existing mortgages that came into force after 31 October How has the sales process changed? Under the regulatory regime there is an important distinction between information and advice sales. KEY CHANGES A "Key Facts" document summarises details and allow consumers to compare mortgages easily Price information in any advertising and marketing material must be clear Both the pros and cons of the mortgage deal must be given in any adverts Where advice is given, firms must ensure consumers are given a "suitable" mortgage Both lenders and advisers have to consider whether consumers can afford the mortgage if factors, such as, interest rates changed Charges must not be excessive New standards are being introduced to improve the treatment of consumers with payment difficulties or facing repossession Advisers must undertake specialist training If you sign up for an information-only sale you will receive information about products, but no advice.
An information sale is only suitable for someone who is certain of the mortgage they want, as only borrowers who sign up to advice-based sales can seek redress at the Financial Ombudsman Service FOS.
At the point of all sales, consumers now receive a summary document which illustrates the key features of the mortgage, known as a "Key Facts" document. This is aimed at helping people shop around and making the process more transparent.
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