The UK's financial watchdog is launching a study into Britain's mortgage market to assess the impact of tougher rules that were rolled out last year to prevent the sort of reckless lending witnessed in the run-up to the banking crisis.
The Financial Conduct Authority (FCA) will look at how the rules, which were introduced in April 2014, are being enforced by lenders in the UK and how they are affecting Britons' ability to buy a home.
Speaking at a conference on the mortgage market in London on Monday, the watchdog's director of strategy and competition, Christopher Woolard, said:
No-one, frankly, wants to return to the unaffordable lending practices of the past, where almost every application was approved. And this is likely to mean (among other things) that assessments of mortgage applicants' circumstances will continue to require more care than they did pre-crisis.
We do, however, have to remain sensitive to the impact of these reforms over the long run. And we certainly need to keep focused on outcomes and whether the market is working well. Even if we believe our rules are proportionate, we need to remain alert to how firms are interpreting them and the effect on consumers.
That is why we will be undertaking a mortgage market study soon, which will include a review on key aspects of the implementation of the MMR.
Under the rules that were part of the FCA's "mortgage market review", potential homebuyers have to go to greater lengths to prove to lenders that they will be able to afford their mortgage repayments, including a more forensic examination of their spending.