We are ready for The Mortgage Market Review
On the 26th April 2014, the UK mortgage market will see the biggest change to regulation in over a decade. The Financial Conduct Authority’s implementation of its Mortgage Market Review will transform the way the mortgage market operates and directly affect anyone with or thinking of taking out a mortgage.
The significant changes for consumers are;
- A more stringent affordability assessment on application.
- Lenders will be forced to delve deeper into a borrower’s financial situation before offering a mortgage.
Lenders are moving away from the traditional income multiples used to judge how much a client can borrow. Some existing mortgage borrowers may be able to borrow less than they currently owe.
- In branch, it is expected that 50% of all borrowers will be obliged to see a qualified mortgage adviser at various stages of application leading to a much longer and in depth sales procedure. All monthly payments and household expenditure will be considered and require validation.
- All mortgage applications will be stress tested at higher interest rates. Historically, low interest rates have kept mortgages affordable. Affordability will however be tested on the expectations of rates over the next five years, this reducing the mortgage available to some borrowers.
- Likely banks and building societies will be ultra cautious over implementation leading to a less fluid mortgage market and stifled product innovation.
- Self-certified mortgages will be outlawed.
Although we are expecting in-branch lending to reduce, we do not anticipate any change for Cooper Associates. This is because our assessment of our clients has always been based on affordability. We already stress test all of our clients and we have never advised on self-certified mortgages.
We meet the requirements for the Mortgage Market Review as part of our normal business model so for us and our clients, it is business as usual. If you have a mortgage or require a mortgage and require advice, please do not hesitate to contact us for a no obligation consultation.