Amid the debate on the European mortgage directive, we need to remain focused on what matters most – customers.
If short-term finance becomes subject to the same regulation as long-term loans, consumers will be hit hard by higher costs and delays.
In bridging finance, speed is paramount and without this the industry as a whole will suffer. If the disitinctions between long-term and short-term finance become so blurred that they almost merge into one, consumers will be left with less choice.
This flies in the face of recent trends that show increasing demand for short-term finance.
I applaud the intent of the directive but agree with the Association of Short Term Lenders that any loan of 12 months or less should be exempt from regulation.
Take, for example, the proposals for affordability checks. There are irrelevant to a short-term loan where no payments are due and the exit strategy is via refinancing. Any reputable bridging firm will have robust risk management precedures to ensure they lend responsibly.
At the Council of Mortgage Lenders’ recent conference director-general Paul Smee said his first lesson of reglation was that for every intended consequence of regulation, there are at least two unintended consequences. In this case those could be less choice for consumers and sigificant obstacles to growth in the market.
We welcome well thought out regulation that protects customers and helps the sector develop. It must recognise the direct characteristics of each section.