Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“While the total value of mortgage lending continues to rise in line with increased house prices, the number of loan approvals stuttered in August. Although this could be down to seasonal changes, it is possible this is a first indicator of the effects of the Mortgage Market Review (MMR), which is expected to usher in a more relaxed pace of mortgage activity thanks to stricter lending criteria.
“While we’re yet to see the full long-term impact of MMR, more detailed affordability checks are likely to slow down the application process, making the turnover of loan approvals less frequent than in recent months. However, this is a sacrifice well worth making, as the new lending criteria ensure that consumers are only given loans they can comfortably afford, helping the market to recover on sustainable rather than shaky foundations. The process is also likely to speed up in the future as lenders and brokers become accustomed to the new checks and systems in place.
“Consumers shouldn’t be put off by the new rules, as there is still a strong appetite for business among lenders. Plenty of applications have already been given the green light post-MMR, and recent rate cuts by several mainstream lenders mean that consumers are also in a position to take advantage of very competitively priced products. Independent mortgage brokers can help navigate consumers through the more demanding requirements and financial evidence required by MMR and ensure that their application is successful.”