The Mortgage Market Review – What’s it all about?

In an aim to ensure borrowers are not offered loans they cannot afford, new mortgage rules came into force in April 2014. The new rules are known as the Mortgage Market Review (MMR).

Many borrowers and lenders panicked with the introduction of the mortgage market review rules, but in truth the impact of MMR on mortgage approvals has not been as negative as many first feared. Sure, most lenders changing their lending criteria has formed a slightly new borrowing landscape making it more difficult for some borrowers to find the finance they need, but the finance is still there and lenders still want to lend!

Thankfully we work with specialist advisors and industry experts who are just as well placed to tackle any new obstacles MMR has brought about as they were pre-MMR, and the most prudent brokers were prepared and had already implemented the changes to their procedures before MMR came into force.

So how will MMR impact me?

Now, when you arrange an appointment with your mortgage advisor you’ll be asked detailed questions regarding your lifestyle and spending habits. Historically this was not necessarily a mandatory requirement, but MMR now requires lenders to accurately assess what you can afford to spend on a monthly basis before deciding how much you can borrow.

Lenders will be looking at how much money you spend on all sorts of things, including:

You also may be asked:

These regular outgoings can be cross referenced to your bank statements and can impact the amount a lender is willing to lend to you, depending on your monthly disposable income after these deductions.

 The positive impact of MMR

Despite what some borrowers and advisors may think, MMR is actually a great thing on the whole. More accurately assessing a customers’ ability to repay the loans they borrow will not only benefit the borrower from overstretching themselves, but is likely to reduce the incidence of default and extreme measures such as repossession, and improve the industry and economy as a whole.

Often customers can be unaware of the implications or indeed have an accurate idea of what they can afford, and it is right that lenders and advisors take responsibility for that assessment. More people living within their means can only be a good thing!

The negative impact of MMR

As lenders now carry the weight of more responsible lending, most banks and building societies have completely revised their sales processes. Due to the lengthy questions lenders are having to ask their customers, appointments are taking far longer and often customers are required to revisit multiple times, whereas pre-MMR things were often completed in one sitting. The knock-on effect of this is an increased staffing demand and not enough hours in the day to complete the process, hence why waiting lists for 1st appointments can span over two months in some areas of the country!

Unlike many banks struggling to keep up, mortgage brokers and the specialists we work with at Online Mortgage Advisor have the time to sit down and help without you having to wait an age to get started!

How to cope with MMR changes if you are declined

If you’re reading this article, there’s a good chance you’re thinking about applying for a mortgage. Don’t be put off by MMR. If you’re not able to find finance your advisor will guide you through the mortgage process so you are eventually in the right position.

There are certain steps you can take to increase your chances of securing a mortgage:

If you’re ready to make an enquiry please fill out our quick form below and an expert will be in touch ASAP. If you require immediate assistance please give us a call on 0808 189 2301 or make an application.