"This research reveals a clear concern among intermediaries, with 30 per cent warning the reforms will lead to riskier lending"
- Rob Stanton - Landbay
Fewer than one in four mortgage brokers support loosening the current limits on lending, according to new findings from buy-to-let lender Landbay.
The lender’s poll revealed that only 23% of brokers believe chancellor Rachel Reeves is right to scale back post-2008 financial crisis regulation. The proposals are part of the Labour government’s broader effort to stimulate economic growth.
During a speech at Mansion House in July, Reeves outlined her approach to financial regulation, stating a preference for rules that support economic expansion rather than focusing solely on risk. She said the government intends to lift restrictions on mortgage lending, “simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults”.
The proposed changes come amid efforts to revive the UK economy following stagnation in the latter half of last year. The Treasury has been working closely with regulators to encourage more growth-focused policy-making.
Despite this, just 16% of brokers surveyed by Landbay believe the reforms will benefit first-time buyers, and only 7% expect the changes to drive wider economic growth.
“My greatest concern is we are regulated for risk whilst ignoring growth,” Reeves has said. “We need to make sure regulators are also taking into account the impact of their policies on growth — that is what we are determined to do as a reforming government.”
However, concerns about the implications of relaxed lending rules were evident in Landbay’s findings. Around 30% of brokers expressed fears that the proposed reforms could lead to riskier loans, while 47% dismissed the chancellor’s plan as minor adjustments, stating that “it’s not a big deal”.
“The chancellor says she plans to tear up ‘reams of financial red tape’ and be ‘ruthless in slashing rules that make the UK uncompetitive’," comments Rob Stanton, sales and distribution director at Landbay (pictured). "But brokers aren’t quite so sure that looser mortgage lending rules will deliver that. While Rachel Reeves’ ambition is clear, our research shows brokers are cautious."
"Only a quarter of the brokers we polled support rolling back post-crisis regulations, with nearly half dismissing the changes as mere tinkering. At Landbay, we understand the need for growth, but striking the right balance between access to lending and managing risk is critical to avoid repeating past mistakes.”
The rules currently shaping the UK’s mortgage market were mostly introduced in the wake of the 2008 crash. A combination of Bank of England and Financial Conduct Authority (FCA) regulations limit how much lenders can offer based on a borrower’s income and property value. These rules also mandate affordability assessments to ensure borrowers can handle future interest rate increases.
Stanton added, “Our survey shows that brokers are sceptical about the reforms to mortgage lending rules, with just 7 per cent believing they’ll spark meaningful economic growth. This research reveals a clear concern among intermediaries, with 30 per cent warning the reforms will lead to riskier lending."
"At Landbay, we’re committed to supporting a stable and sustainable buy-to-let market, but these changes need careful consideration to ensure they don’t compromise long-term financial stability. Rather than relying on the cutting of red tape we’re exploring opportunities to ensure our range is competitive, while harnessing innovation through product transfers to increase routes for landlords set to refinance. Regardless of the regulation vs growth agenda, Landbay is pushing ahead to improve our range, equip brokers, and support borrowers.”
