JustUs founder Lee Birkett has been left “frustrated” after waiting months for a peer-to-peer exemption to offer mortgages while the government makes plans to remove the stress test for banks to offer 95 per cent loan-to-value (LTV) mortgages.
JustUs has been ready to offer residential mortgages for many months, after the City regulator confirmed last year that home finance rules could be applied to the sector.
Birkett proposed the People’s Mortgage, where anyone would be be able to invest in, and therefore fund, mortgages. He wants to offer 2.5 per cent fixed mortgages with a government guarantee paying one per cent to investors. He also wants the product to be eligible for inclusion in an Innovative Finance ISA for tax free investing and said he’d call this the People’s ISA.
He added that JustUs was given permissions to offer home finance through the platform in January but has since been waiting for an exemption from the government to allow P2P mortgages.
Meanwhile, at the Conservative Party Conference, Prime Minister Boris Johnson promised to deliver long-term 95 per cent LTV mortgages for first-time buyers. Many higher LTV mortgages were available pre-Covid-19 but the pandemic has led to many lenders pulling back these products.
According to The Telegraph, Johnson has asked ministers to draw up plans for these mortgages which would likely remove the stress tests required of banks that were introduced in the wake of the financial crash.
“Boris is likely giving an exemption to banks to allow them to lend higher,” Birkett said.
“We want an exemption too. It would only be a one-page legal document.
“We’re frustrated that we’ve been waiting since January. We asked the FCA, they sent it to the Treasury and they then said its under the regulator’s remit.
“The economy won’t recover without an exemption to the rules. Why won’t they allow fintechs to do it?
“We’ve been campaigning for the People’s ISA for mortgages, paying one per cent to everyone funding mortgages and backed by a government guarantee.
“There’s a trillion pounds worth of cash earning nothing in banks that could be transferred into our ISA. People are hunting for yield and mortgage-backed security is the best in the world.
“We have an innovative solution, supported by some MPs such as Kevin Hollinrake and Esther McVey. The government should be adopting it but they’re not. They aren’t supporting fintech at all.”
“We are exploring the potential for long term fixed rate mortgages in line with the Conservative manifesto commitment, but no details are available yet,” a Treasury spokesperson said.