Q: I’ve heard significantly different answers from various sources on the issue of ‘mass declines’ of mortgage applications post-MMR.
I can’t imagine it was the FCA’s intention to create rules that meant huge numbers of potential borrowers were declined however it seems that lenders think there might be a chance of this?
A: It appears there are some mixed messages emanating from the industry on this topic. At our recent mortgage and protection round table the representatives from the FCA were very confident that the industry would not be dealing with ‘mass declines’ post-MMR and suggested that the lenders they had spoken to felt the same way.
However I have seen some recent data from the Bank of England’s credit conditions survey that appears to show that lenders expect the number of declines to increase.
It does seem inevitable that some people who might have secured mortgage finance pre-MMR are not going to get through the tighter affordability constraints in the new environment.
But the answer to how many will fall into this bracket is anyone’s guess at present.
I doubt it will reach the ‘mass’ stage but brokers certainly need to prepare their clients regarding the new rules and outline why criteria has been tightened, what this might mean for their chances of securing a mortgage, and how the process will perhaps be different, be more involved and be lengthier.
This will be especially relevant for those who have gone through the mortgage process pre-MMR.
The proof of the pudding will be in the eating on this one and we will all be keeping a watching brief on how lenders trade under the new rules.
