One year has passed since the Mortgage Market Review, and we thought we should take a look at the impact it’s had on homebuyers and the general market. Since last April we’ve noticed a lot of movement caused by the stricter criteria for lending.

Introduced to make the market more secure and stable for borrowers and lenders alike, the MMR has certainly left its mark. And we’ve been looking into the latest reports on the market.

Who’s been affected?

Many borrowers are still securing mortgages, but with the new rules making irresponsible lending very difficult, the numbers of new borrowing has fallen – as was expected.

FT.com graphic
Chart shows decline in mortgage lending since the MMR. Image originally appeared on FT.com. Source: FT.com/ CML.

In the effort to make sure people can afford to borrow, many potential borrowers have been frozen out of the mortgage market by lenders. These include older borrowers and the self-employed. Getting a mortgage was never easy for these groups, but since the tougher rules came in, the struggle has intensified.

Without predictable monthly salaries, self-employed people are finding it very difficult to secure funds. As for older borrowers, the changing economy means many can only buy later in life, yet the lenders seem to be erring on the side of caution, and using the MMR to decline such applicants.

However, it does look as if the industry is going to reassess both of these issues this year –  after all, many people are actually in the position to safely borrow but may not fall into the ‘safe’ categories that the banks seem to prefer lending to.

More use of broker services

Towards the end of last year, 20% more borrowers were using brokers to help them get mortgages compared to last April, when the MMR came in. Intermediaries are also seeing a rise in business from self-employed people with many now turning to specialist lenders to secure the means to buy a home.

Posted in First Time Buyers, Mortgages, News, Next Time Buyers, Remortgaging