There are still “structural challenges” to homeownership that must be confronted, according to Financial Conduct Authority (FCA) chief executive Nikhil Rathi.
Speaking at the L&G Mortgage Club conference today, Rathi praised the performance of lenders and brokers, especially during the Covid pandemic, cost of living crisis and higher interest rate environment.
He added that “as we started our Mortgage Rule Review this year, some reforms have not been met with universal approval among brokers”.
But Rathi said there were still “structural challenges” remaining to homeownership for many groups.
He said: “Feedback to our recent Discussion Paper highlighted that if you cannot raise a large deposit, do not have familial support, are self-employed, have irregular income, are recovering from a negative life event, have overseas assets and income or have dealt with minor credit impairments – you are likely to find it more difficult or expensive to get a mortgage.
“You will all have your own clients for whom it has been unnecessarily difficult. Some of these groups are growing – and there is nothing unusual about them.
“Without change, more are likely to rent for longer – with the proportion of people renting in retirement potentially more than doubling by 2041, perhaps requiring almost £400,000 more in savings than for those who own a home.
“The market and regulation needs to serve them better. We don’t have all the answers – but we want to give firms more options.”
He said the future of the FCA’s review would not just be focused on the current mortgage market, but the one of the future.
He hinted that shared ownership and equity release was high on the FCA’s agenda.
“Do we need to reevaluate the trade-offs of, at least partial homeownership, against the alternative of renting into retirement, and the additional pension saving it requires?” Rathi said.
“Can some of the nation’s £9 trillion of housing wealth be unlocked more effectively, and put to more productive use, particularly to sustain living standards in later life?”
