Upcoming Challenges

12 April 2018

The pace of change shows no sign of slowing down and neither do the challenges that we face.

It appears that an interest rate rise may once again be around the corner, even as soon as May. The Chancellor set an expectation that inflation will return to the target 2% within the next year, which conversely may cast doubt on the necessity to raise rates in the short term.  Wages are increasing and so the balance between rate rises and controlling inflation is sure to be a fine one.

Potentially a bigger challenge than a prospective rate rise is the implementation of GDPR which is just around the corner. This is likely to have wholescale changes to the way that data is kept, from how we gain permissions from clients to how their details are kept and how long for.

While banks and building societies have been preparing for GDPR for some time, the Federation of Small Businesses (FSB) reported that over half of small businesses have either not yet started preparing or were only at the early stages of compliance, despite the potential fines of up to 4% of annual turnover. This may well impact on banks and building societies that use small firms as suppliers.

There are also changes to Support for Mortgage Interest (SMI) to be catered for. Borrowers who have found themselves in receipt of income support or some other benefits are facing new challenges from 5th April.  While the government has made it possible for borrowers to apply for a loan to cover their mortgage interest instead, there will inevitably be people who have not applied for this, or at least not in time, so there could possibly be an increase in arrears amongst this segment of borrowers. While most lender systems will cope with this and send the necessary arrears letters, etc, it may well be necessary for lenders to make contact with these borrowers to advise them of their options before it becomes too serious.

Finally, with the withdrawal of both the Funding for Lending and the Term Funding Schemes, the market is heating up for an increase in the number of securitisations.  There has already been an increase in the number of mortgage books being securitised in the past year. This is widely expected to increase as the year progresses and lenders look for new forms of funding to replace some of that which they may well otherwise have received from the government.  This is the return of an exciting area of the market that many will utilise once again. It will be an area no doubt that regulators worldwide will be keeping an eye on.

 

Media contact

Debbie Staveley
Director and Owner,
bClear Communications

Telephone
+44 (0)1275 542 511

Email

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