Professor David Miles today published his final report setting out recommendations to improve the UK mortgage market.

The recommendations fall broadly into two groups, firstly those that are aimed at improving the advice and information that borrowers receive and at creating a fairer and more transparent pricing structure.

Secondly those that are aimed at helping lenders fund mortgages and handle risk in the most cost-effective way.

Many of the recommendations in the first group reflect the current best practice of lenders and financial advisors.

The second group of recommendations have the potential to reduce the costs to lenders of offering several different types of mortgage.

The recommendations include: * that lenders make their full range of mortgage products available to all borrowers. * that mortgage advisors help people assess risk by presenting "what if" scenarios, giving an indication of the scale of variability in interest rates. * that lenders include, with Annual Statements, a leaflet setting out the current mortgage rates on all their products. * that if products are offered which give interest rate protection for mortgage borrowers the Government treat these as insurance for tax purposes. * that Government consider lowering the funding limit by non-members from the current 50 per cent. 25 or 30 per cent of building societies' funds from members would still represent a substantial source of funding. * that covered bonds issued by UK lenders are treated in the same way for regulatory purposes as those issued in countries where specific legislation governing issuance has been necessary.

Currently mortgages in the UK are overwhelmingly either at variable rates or at rates fixed for around two years.

There are good reasons to think that if the UK market worked better many more mortgages would be at rates that were fixed for periods longer than is currently common.

More borrowers would then be insulated from the impact of unexpected changes in interest rates at times when the stock of their debt was large relative to their incomes and when the impact of charges in interest rates on the affordability of their mortgages is great.

Friday March 12, 2004