Mortgage blog: New rules making it harder to get on the housing ladder

Posted 25 July 2014

A new survey of mortgage advisors has found that the majority of brokers believe it is harder for borrowers to get onto the housing ladder since tough new rules came into force this year. The Mortgage Market Review came into effect in April and brokers say that their clients - even those with a large deposit and a good credit history - are finding it harder to be agreed for a mortgage since the rules changed.

Experts have also expressed concerns about the time it is taking lenders to underwrite and process mortgage applications.

85% of brokers say it is harder to get a mortgage deal agreed

The survey of mortgage brokers and IFAs by BEP Financial Systems found that "hundreds" of advisors claim their lives have "got much harder" since the mortgage rules changed on 26 April this year. While many industry experts expected some teething problems as the new rules came into effect, the research found that 85% of advisors have been finding it "longer and more difficult to get a mortgage case through".

Chris Little from BEP said: "This has been clearly reflected in recent statistics from both the Council of Mortgage lenders and the Bank of England showing a continuous drop in mortgage approvals. While the mortgage application process will inevitably continue to take longer than it did before the MMR, it should start to get easier as everybody becomes more familiar with what is required of them and it will be interesting to see if the results of our survey in three months' time show this to be a reality."

Lenders taking ‘forever' to process mortgage applications

One of the most common concerns from mortgage advisors was that lenders were taking "forever" to look at cases with many reporting significant delays in the processing of applications. Others reported that staff at lenders were unfamiliar with the new procedures and were no longer underwriting, just following procedures.

78% of respondents to the survey also said that lenders' affordability rules differed either slightly or significantly. One said that "affordability seems to be a haphazard practice with different lenders having completely different rules".

According to the research, two-thirds of advisors said that it now took them over an hour to conduct an initial mortgage interview, double the 33% who said that it took over an hour before the new rules came into force. Some reported that it now took three hours to conduct the initial mortgage interview.

An additional 25% of brokers cited the new regulations as having a "substantial impact" on their business, with lenders not keeping them adequately informed. Over half of respondents (57%) said that lenders had not provided them with enough information on regulation and best practice.

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