Well possibly; at least for some fixed rate mortgages anyway.
New rules from Brussels could hit that particular segment of the mortgage market hard affecting many of our clients from Penzance to Bristol. In the future, smaller lenders may well find it too expensive to provide this type of product given Europe’s planned reforms to the way derivatives are traded.
Derivatives provide the lender with the much need hedge against an income squeeze if
future interest rates should rise. Under the proposed system, following international
deliberations in the wake of the Lehman Brothers collapse seven years ago, costs in the
derivative market will increase significantly, something which may prove to be too much for
the smaller lenders to carry.
The USA has already exempted smaller lenders from the more onerous international
standards; its hoped that Britain can persuade Brussels to do the same.