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New affordability checks won’t reduce mortgage applications!
Intermediary mortgage lenders are confident that new affordability checks resulting from the Mortgage Market Review (MMR) will not significantly reduce the number of people who successfully apply for a mortgage.
Research by the Intermediary Mortgage Lenders Association (IMLA) found that just 7% of intermediary lenders expect significantly more people will be turned down for a mortgage because of new stress tests, which will examine whether borrowers could afford their repayments in the event of interest rates rising.
IMLA’s Intermediary Lending Outlook report shows that almost three quarters of lenders are confident that affordability checks will not impact borrowers in large numbers (73%), while the remaining 20% are unsure.
Although over a third of brokers do not expect stress tests will significantly reduce the number of successful mortgage applicants (34%), close to half predict that considerably more consumers will find they are turned down (44%).
Overall responsibility for affordability checks will officially pass from brokers to lenders when the MMR takes effect in April 2014. While many of its provisions are already standard practice for lenders, mortgage brokers are less convinced that aspiring borrowers will be unaffected.
However, brokers are significantly more confident about the impact of the MMR than they were at the start of the year. Two thirds (66%) are not at all worried in August 2013, compared with 42% in January 2013, and the percentage with significant worries has dropped from 12% to 4%.
Post courtesy of Financial Reporter.