Bridging volumes rise after MCD introduction

MTF said that in the run up to the Mortgage Credit Directive (MCD), which was implemented in March this year, many brokers had concerns that the new rules would lead to a decline in loan volumes. The survey showed that fears were unfounded with only 15% of brokers surveyed experiencing a drop in business since the MCD was introduced.

Almost half of brokers said they had experienced an increase in volumes since the MCD was implemented, while 39% said volumes remained the same.

More than a third of the 101 brokers surveyed said that post-MCD, delays to mortgage applications had caused them most difficulty. Complications with new affordability models were an issue for 31% of respondents and 22% of brokers said that changes in consumer buy-to-let rules had created most problems for their business.

Tomer Aboody, director of MTF, said: “The results reflect the introduction of stricter affordability and stress testing, which may be leading to delays on mortgage applications. Equally, the introduction of the ‘consumer buy to let’ has led to a transitional period, during which brokers and borrowers alike become familiar and comfortable with this new regulatory class.”

“The MCD creates an opportunity and a challenge to both the mainstream and bridging finance markets, which both sectors seem more than well placed to face.”

The survey found that 40% of brokers said borrowers looking to remortgage had been most affected by the new MCD rules. The second group most affected by MCD were landlords, followed by low income borrowers at 17% and self-employed borrowers at 16%.

The survey also identified that development projects were the main reason for seeking a bridging loan during the second quarter at 42%, followed by mortgage delays at 25% and purchasing an investment property at 16%.