A feeling of optimism has enveloped the housing market with many commentators predicting significant house price growth rippling out from London.
But against this backdrop of optimism and increasing transaction numbers comes the potential spanner in the works: the implementation of the FCA’s Mortgage Market Review.
So should we be preparing for a mortgage apocalypse, or keeping calm and carrying on? The MMR is undoubtedly a big change to the mortgage market, however much of the new regime is already in place.
We have had a lengthy period for implementation of the new rules, which has given lenders time to get their heads round the required mindset.
For those lenders taking part in the Help to Buy mortgage guarantee scheme, the MMR rules have been in place since the start of the year. The area where borrowers, advisers and lenders alike will see changes is in assessing affordability through a far closer look at income and expenditure.
The process of determining a consumer’s committed, essential and discretionary expenditure will take longer than using income multiples, however in most cases it should be straightforward.
No-one likes providing extra information and the inconvenience of bringing extra documents when making a mortgage application will be an annoyance to consumers, but let’s not forget that this is the biggest financial purchase in most people’s lives so it’s important to get it right.
Those in the industry know that sentiment is vital to the housing market; consumers are constantly asking themselves whether now feels like the right time to buy, so by remaining positive and managing expectations we can make this a summer to remember – for the right reasons.
Colette Best is mortgage policy adviser at the Building Societies Association
