I’m probably correct in thinking that most of you will associate MMR with a widely debated vaccine.
However given the impact that the Mortgage Market Review (also known as MMR) will undoubtedly have on homeowners looking to secure a mortgage, I would urge all those who are about to arrange a mortgage to understand what the new regulation entails and how it could affect their mortgage application.
The MMR is a set of regulatory rules that will come into effect from 26 April 2014, which directly impact on UK mortgage lenders and intermediaries (such as the team here at Complete Mortgages).
The new regulations have been put in place by the Financial Conduct Authority to prevent risky lending, avert another major meltdown in the financial services sector and nip any potential housing bubble in the bud before it becomes a cause for concern.
This means that there will now be greater expectations placed on lenders and intermediaries when it comes to checking the credentials of those applying for a mortgage.
So, rather than using the traditional core values such as salary and outstanding loans to determine the borrowing limits of an applicant, we will now have to delve deeper into areas such as the cost of childcare, commuting to and from work, heating and electricity costs and even monthly outgoings attributed to eating out and socialising.
In the short-term it means that applicants may be disappointed to learn that they aren’t able to borrow as much as they thought they could. Ultimately, this means that in the long-term applicants will be in a safer position and more equipped to deal with a rise in interest rates as and when this happens and other external factors that could make mortgage repayments difficult in the future.
However as you can imagine, an almost forensic approach to applicants’ spending habits means that by going to the bank to arrange a mortgage, the entire process is going to take much longer than what the industry – and the customer – is used to. There is already a growing fear that the typical one-hour meeting at the bank could become three and a half hours long. As a result, customer waiting times are also expected to rise so dramatically that there is concern that by the time the mortgage is secured, applicants could have missed out on the property that the deal was required for.
As independent mortgage advisers our expertise lies in navigating our clients through the mortgage application process and making securing a mortgage as easy and affordable as possible.
Now more than ever our advice to everyone looking for a mortgage, from first time buyers through to seasoned homeowners, is to find a mortgage broker that you trust and one that takes a whole-of-market approach to what, for the majority of people, can often be a daunting process. As highlighted, the hurdles that the MMR now imposes to the banks’ in-branch advisers means that using a mortgage broker and the skills and contacts they will have developed will significantly expedite the application process.
If you would like advice on how the MMR could impact you or if you are looking to arrange a mortgage, simply get in touch with the Complete Mortgages team on 01483 238280 or email email@example.com to arrange a free mortgage consultation.