There are certain dates that become etched in one’s mind. The date your tax return is due, family birthdays and, if you’ve got any sense, your wedding anniversary.
This year advisers will no doubt have 21 March in their heads too. That key date is of course the day the Mortgage Credit Directive (MCD) comes into play and, as a result, second charge loans come fully under the same regulation as their first charge counterparts.
This is, indeed, an important date for the sector. However, I’m slightly concerned that too much emphasis is being put on the date regulation officially commences and that mortgage brokers are not aware of changes happening much sooner.
All pipeline cases need to complete by 21 March so second change lenders and brokers are adopting MCD more than a month earlier, in early February. This means new rules, new documentation and new affordability calculators will be applicable and, according to insiders, lenders are expecting a lot of deals to fall out as a result of these changes.
As such, far from being a couple of months away, new processes under MCD will actually kick in in just a few weeks’ time. This means brokers have just two weeks to submit any cases under the current rules. Any deals not completed in time will effectively start from scratch with new criteria and within the new advised sales process. Many will simply no longer fit.
The clock is ticking if you want to get the deals you’re working on through under the current criteria. 21 March is a crucial day for the industry but the real change starts much sooner.
