Anyone in the “mortgage know” will be aware of the new affordability checks which came into effect at the end of April this year.
The changes were brought into effect following the “Mortgage Market Review" (MMR), which was ordered by the government to avoid a repeat of the 2008 housing recession.
Lenders have stated that the changes have only put a "gentle dampener" on the UK mortgage market during their first months of operation, rather than bringing about any abrupt changes.
My opinion is simply that lenders now ask more questions, do more checks and take longer to get to the same result. I think the banks had already taken a good hard look at themselves in light of the review, and slowly tweaked their criteria over the past couple of years in order to avoid irresponsible lending.
Contrary to early industry beliefs, Lenders are reporting a steady rise in first-time buyers despite the changes. Somehow the message has filtered through to new borrowers that inside leg measurements and DNA tests are now required in order to get a mortgage and you need good credit, a decent deposit and an excellent work history. Our experience here is that most are turning up with a full set.
Nationally, First Time Buyers borrowed an average of £122,000, in the first three months of 2014, they typically borrowed 3.46 times their income. Mortgage Required’s FTBs averaged £178,000 owing to the South East’s house prices. Interestingly, our FTBs still only borrowed 3.55 times their income, which clearly shows incomes are also inflated in this area!
Another feature of MMR is the stress test, where lenders are required to work out if new borrowers would still be able to afford their mortgages if the interest rate rose considerably.
I think the Bank of England have given us enough warning that the Bank rate may rise in “baby steps," perhaps as early as the latter part of this year, so any rise will have been taken into account by lenders following the new rules.
So, in summary: mortgage availability high? (tick), application process more thorough? (tick), Lots of FTBs buyers? (tick), House prices increasing? (tick), Good time to buy? Of course!
For more information or to speak to a mortgage adviser contact us or call on 01628 507477.
Recent posts
Decorating Tips for Selling Your Property
14 days ago
Selling up? It’s important to make your house as appealing as possible to potential buyers. Good decorating can help with first impressions, and increase the perceived value of your property.
20 Budget-Friendly Activities
25 Aug 2023
With the cost of living affecting so many of us, we have made a list of budget-friendly activities and ideas for you.
Moving and Packing Tips for a Stress-Free Move
21 Jul 2023
Moving soon? It's never too early to get organised! Be prepared and avoid unwanted stress by checking out our list of tips to get you ready for moving day.
What is the UK Inflation Rate?
27 Jun 2023
Inflation simply put, is the increase in the price of something over time. The Office for National Statistics (ONS) tracks the prices of hundreds of everyday items and these items are updated to reflect shopping trends.
Debt Consolidation into a Mortgage
20 Jun 2023
We are often asked if it's good advice to consolidate “unsecured” debt (credit cards and loans etc) into your mortgage, the answer is, sometimes.
Parking Rules Explained
16 Jun 2023
When you’re looking to buy a home, and you own a car, you ideally want to know the rules on parking in the area. Parking rules can be confusing, even for the most experienced of drivers! This is why we have written this blog to help you.
Sources of Deposit to Buy a Property
6 Jun 2023
There are several potential sources you can consider when it comes to getting together a deposit to buy a property. Providing proof of the source of your deposit is a key requirement in the application process and will need to be given to both the lender and the solicitor.
More information
Trusted by
