The Intermediary – March 2026 - Flipbook - Page 30
RESIDENTIAL
Opinion
Locked out for
long enough
I
t’s increasingly clear that the
regulatory pendulum has
swung too far in the direction
of protecting the system from
future shocks.
Fewer than 1% of mortgage
accounts were in arrears at the end
of 2025, according to an estimate by
the Intermediary Mortgage Lenders
Association (IMLA), and this is
expected to go down even more.
You can look at this two ways.
Either so much resilience was built
into the market aer the financial
crisis that it saved borrowers from
galloping inflation and interest rate
hikes, or too many protections were
baked into lending rules, restricting
access to homeownership for way
longer than was necessary.
I’m leaning to the laer. You can’t be
an effective lending industry without
some element of risk.
The regulator may be pleased
with its policies and practices that
have almost wiped out arrears in
the market, but it begs the question
– at what cost did it come, and
how can we now best help those
caught in the post-Credit Crunch,
rule-tightening crossfire?
Risk squeezed out
A staggering 3.5 million households,
according to IMLA, were locked
out of property ownership because
regulation and affordability
constraints made it too tough to get
a mortgage. They got trapped in the
rental market, punished because of
ingenuous regulation leading up to
2007 and 2008.
Since then, millions of households
have been forced to grapple with rapid
rent rises stopping them from saving
any meaningful deposit – and all the
while house prices continue to climb.
Let’s face it, the Credit Crunch was a
disaster hiding in plain sight, yet those
overseeing the loose credit policies
appeared not to have seen it coming.
It puts me in mind of Kier Starmer
claiming not to know of concerns over
Peter Mandelson when briefing notes
from the security forces and others
suggest that he did (allegedly).
There must have been a heck of a
lot of market naivety if everyone truly
believed borrowers would tell the
truth about how much they earned
when they were allowed to self-certify
or sign a form to say they could simply
afford the mortgage.
Regulatory overcorrection
But lessons were most definitely
learned, and in 2014 the Mortgage
Market Review (MMR) was unleashed
onto the market, containing
mountains of regulation, squashing
all appetite for risk and innovation.
Why did more than a decade have to
pass before further review was deemed
necessary? This started with an
For many aspiring homeowners, the door to the housing market remains closed
28
The Intermediary | March 2026
HELEN PIERSON
is director at Mortgage Advice
Bureau New Homes
announcement from the Financial
Conduct Authority (FCA) in March
2025 that there was flexibility in
the stress testing rule, reminding
lenders they did not have to be overly
restrictive in their assessments.
The Financial Policy Commiee
(FPC) removed its recommendation
that lenders should stress test at
3% above the reversion rate in
2022, and many lenders did change
their approach, but we know
that assessments remained strict,
nonetheless.
Could the regulator not have moved
sooner to provide this ‘clarity’ if it
was clear that lenders were still being
overly restrictive in the way they
stress tested borrowers? Surely it was
monitoring arrears levels and could
see that the risk pendulum remained
too far over to the side of caution.
But we are where we are – the
beginning of the regulator’s road map
for the Mortgage Rule Review, which
this year will look at how first-time
buyers, among other underserved
borrower groups, can be beer
supported, with a renewed openness
to flexibility
IMLA says we can afford to be more
ambitious, given how low arrears have
remained during the last few years of
volatility in the economy.
I agree, but I’d go a step further.
We owe it to the ‘lost generation’
of homebuyers, punished for the
recklessness of a market they
were too young to be part of, to be
more ambitious.
Decisions now must come swily.
They must be clearly communicated
to lenders, and more importantly to
first-time buyers – those who have
been locked out and lost out on their
dream of homeownership for far
too long. ●
