The effect of the Mortgage Market Review

In April 2014 the Mortgage Market Review was introduced to reform all aspects of the way mortgages were regulated in the UK.  It was designed to create a more sustainable market for lenders, brokers and consumers.

From a brokers point of view I have to admit I wasn't looking forward to these changes and there was a lot of uncertainty as how it would affect my business and my customers.  I was expecting it to make my job much more difficult and time consuming while making it harder to place mortgages.

Eight months on and I think it has probably been the best thing to happen in the mortgage market in the 15 years I have been advising.  There were a few teething problems resulting in slower turn around times for applications, and some system issues, but after a couple of months these were resolved.

There has been very little impact on the ability to place cases despite what the national press would have you believe.  The lenders are now more keen to work with brokers as it takes some of the workload away from their branches, and it has encouraged consumers to take impartial advice rather than just go straight to their own bank.

Some of the important changes include:

  • Removal of the brokers requirement to assess affordability with emphasis now on the lenders
  • Removal of the non-advised sales process
  • Every seller must hold the correct qualifications
  • All income must be verified during the application process
  • Interest only loans can only be issued where there is a credible strategy in place to repay the loan
  • Second charge lending with now be regulated by the FCA

These are all fairly common sense points and should have been introduced years ago.  Many lenders had made these changes prior to April so the transition was relatively painless and hopefully will result in a more stable and sensible mortgage market going forward.

It makes it more important for consumers to use the expertise of a qualified mortgage broker before applying for a mortgage.  If you would like to discuss this article or you need some mortgage advice please contact us

 

Your home may be repossessed if you do not keep up repayments on a mortgage

 

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