It’s not just the loan requirements that are getting the attention of the industry.
As well as a growing number of institutions being put into a wider loan portfolio, the sector is being urged to get its priorities straight on its loans.
“It’s about doing what’s right for consumers, and making sure they have access to finance,” says Michael Josten, the head of retail lending at RBS.
“If you’ve got a mortgage, it’s not a bad thing to have a bank lend to you, because that’s what people are used to.”
“It has to be as affordable as possible,” says the UK Bankers Association chief executive, James Morris.
“You can’t afford to be in a high-interest environment and that’s why we’re seeing the banks looking at more cost-effective ways of getting into the market.”
The focus has been on how to do it.
It’s an issue that has been a theme in recent months.
In October, the Government announced that it would raise the capital needed to lend to the next generation of homebuyers from £1.4bn in 2020-21 to £1bn by 2023-24.
But this was done before it released the details of its plans to raise the cap on interest rates to a rate that will suit all borrowers.
“I think what you’re seeing is that banks are getting on with the business of making sure that consumers have access, and that they can afford to pay off their loans,” says Mark Evans, the director of research at Capital Economics.
“In terms of what they can offer, it has been quite a good year for the sector and for the government.”
What’s needed to make sure consumers can afford the mortgage?
“We’re talking about the average consumer paying off the mortgage at a rate of between 10% and 12%, so we’re not talking about a household earning less than £50,000,” says Mr Morris.
He adds that it’s a key issue for borrowers and that “banks need to be able to do a better job of explaining why the interest rates they’re charging are good”.
A key issue in many people’s minds is the cost of interest payments, which has risen dramatically over the past five years, partly because of rising mortgage rates.
“We are seeing the effect of rising interest rates, especially in areas like energy, where the cost is rising faster than inflation,” says Ms Evans.
A new set of rules will come into force on September 30, requiring banks to ensure borrowers have access for two years. “
That’s why there has been more focus on the issue of affordability and the issue that is the biggest issue for the industry right now.”
A new set of rules will come into force on September 30, requiring banks to ensure borrowers have access for two years.
There will also be a cap on how many times a borrower can pay interest on their loan before it is discharged.
“A lot of people are really struggling to get into the mortgage market because of that, and they’re getting squeezed,” says Alan Whitehead, the chief executive of the Mortgage Advice Service.
“They are getting squeezed for the same reason as anyone else, and banks are responding by offering higher interest rates.”
As well the capital requirements, banks have to get their priorities right when it comes to lending to the consumer, says Mr Evans.
This includes a “loan guarantee” clause in their lending contracts.
That guarantees a loan to a borrower if the lender has enough equity in the property to cover the loan repayments.
It is a provision that banks have used in the past to ensure that customers can afford a mortgage.
But with the new cap on the interest rate and the requirement for lenders to do an assessment before they can lend, banks will need to make some tough decisions.
“There is going to be some competition, but banks have got to do their homework on how they can attract a wider group of borrowers to the market,” says Jostens.
“What we’ve been seeing is a lot of interest from the private sector in the last few months, and a lot more interest from consumers who are looking to take out a home loan, because they can get the same rate for a home and the same terms and conditions.”
As for the consumer-facing measures banks have already taken, Mr Whitehead says they are still “at a stage of making a decision on how best to move forward with them”.
The Bank of England has set a target of having 20% of the loans issued by the sector covered by the guarantee clause by 2019-20.
“The best way to go is to do what’s best for consumers,” he says.
“But if we are going to do that, we need to think very hard about how to make that happen.”
The Government’s new £1,000 cap on loan costs is expected to have an impact on the industry, with more banks and smaller lenders moving into the sector.
But some believe it will only be temporary.
“When we see how many people are being forced to take on mortgages