Almost half of people planning to buy a home have failed to
A new survey has revealed that changes to the way mortgages are underwritten has significantly impacted on the ability of homeowners to buy a property. The latest insight report from credit agency Experian has revealed that almost half of people who were planning to buy a property since the introduction of the new mortgage rules have failed to do so.
A quarter of people believe that the rule changes have impacted their ability to buy a property while a further third say that they are now less in control of securing a mortgage.
Experian's new insight report, The Mortgage Muddle - One Year After The MMR, has revealed that many potential homeowners have been disappointed by the new Mortgage Market Review (MMR) rules.
Some 45% of those who planned to buy a property since the introduction of the government’s new affordability rules last year have failed to do so while the research also found that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. Almost half (46%) have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money.
James Jones, head of consumer affairs at Experian, commented: “Preparation is the key to successfully navigating the mortgage market post-MMR. Understanding the affordability rules and how a lender makes their decision is the key to success. But it can take time to build a positive credit history and a solid track record of positive money management, so it’s important you start preparing as soon as you make the decision to buy.”
Of 1,500 respondents who either bought or planned to buy a property in the last year:
- 62% were not aware that lenders may require bigger deposit
- 37% didn’t recognise that lenders would now be more careful on whether they could afford repayments
- 15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR
The survey also revealed that of those who were unable to buy in the last year:
- 13% do not know how much money they have left over at the end of the month
- 18% don’t even know what monthly repayments they can afford
- 14% did not have a big enough deposit for the property they wanted
- 12% were unable to secure the size of mortgage they needed
Guy Shone, at ExplaintheMarket, comments: “We’re now one year on from the MMR and it seems many people remain stuck in a bit of a muddle. More needs to be done in 2016 to encourage personal financial planning and properly support aspiring home buyers, so that all buyers fully understand the rules of the game – and stand the best chance of securing a property they can afford.”