On April 26th, brand new mortgage regulation known as the Mortgage Marketing Review (MMR) came into effect which means new borrowing rules for mortgages.
In my opinion, the Financial Conduct Authority (FCA) has worked hard to learn lessons from the credit crunch and the spirit of the review is all about ensuring borrowers don’t get into such a mess in the future.
Mortgage lenders will now have to pay closer attention to applicants spending habits and check everyone’s income in 100% of cases. Banks will be responsible for “Stress Testing” applications to make sure repayments can be met if the interest rate rises three or fourfold.
Interest only mortgages will only be available to people who can prove they have a credible repayment vehicle in place to repay the capital at the end of the loan. Rules regarding mortgages which go beyond people’s retirement ages have been tightened up and the overall theme is… well more cautious lending.
Banks have been gearing up for the new rules, testing systems, tightening up their affordability calculators and generally frightening the life out of Brokers. They have also used MMR as an opportunity to tighten up their Money Laundering Rules and educate brokers on how to wheedle out “soft fraud” cases. I.e., cases where applicants are trying to bend the truth!
The immediate impact will no doubt be that lenders will become slightly less generous with their lending criteria and applicants may have to wait a bit longer for their mortgage offer to arrive (new rules, new systems and staff training all takes time!)
By the time this article is printed, we will be about 5 days in. The last time a new set of rules came in effect was 1st November 2004 – the date the Financial Services Authority took over mortgage regulation. I remember it well. A floppy disk arrived (remember them), which didn’t work, so we all went to the pub!
For more information contact us or call an adviser on 01628 507477.
Recent posts
The government has announced plans to make buying or selling a home cheaper and quicker with what is being called the “biggest shake-up to the homebuying system in this country’s history.”
More borrowers using equity release
17 days ago
Almost one in five equity release mortgages are now taken out to provide financial support to family.
Buyers purchasing properties sooner
19 days ago
According to industry data, the expected wait for those looking to buy a property has dropped from just over 11 months to less than six months.
It is common for your first mortgage payment to be higher than your subsequent monthly payments for two reasons.
What to do just before you get your keys
24 days ago
Firstly, a big congratulations, you’ve now exchanged contracts! After weeks and months of waiting, you are about to move in. What should you do first?
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
Landlords could face a new tax this autumn
29 Aug 2025
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More information
Trusted by
