How has the MMR really affected conveyancing?
One year on from the 2014 Mortgage Market Review (MMR) there have been conflicting thoughts on how the changes have affected mortgage lending.
When the stricter screening processes were introduced, many conveyancers feared this would have a negative effect on residential property transaction levels and the home moving process would lengthen significantly.
Many specialists from the property industry have had mixed views on how the market has been affected. Here are just a few of the thoughts from various sources – which do you agree with?
Doug Crawford, CEO of myhomemove, says mortgage approval times have levelled out, but some borrowers have been more affected than others.
“One year on, fears that the Mortgage Market Review would freeze the housing market have proved to be overblown. We found that mortgage offer times shot up by 27% after the reforms, before slowly returning to normal. Now that lenders and brokers have got to grips with the new rules, approval times are broadly the same as they were before the changes came in.
“Consumers were very frustrated by how long it took to get a mortgage approved immediately after the changes were introduced. But now, while some mortgage applicants might be surprised by the extra questions they get asked compared to their last mortgage, most people don’t notice that the process has changed.
“However, the Mortgage Market Review has created some losers, notably the self-employed and older borrowers who in some cases have struggled to get mortgage applications approved. The tough affordability rules mean lenders need to be certain that borrowers can pay for the mortgage. It can be hard for older borrowers without evidence of their future retirement income or for self-employed people with irregular working patterns to prove they will be able to pay back the loan.”
Mark Hayward, Managing Director of the National Association of Estate Agents (NAEA) says a large proportion of estate agents have reported a decrease in home buyers, as a direct result of the MMR.
“This Sunday sees the anniversary of the Mortgage Market Review coming into play and we can now really see the substantial effects it has had on the property market. The new rules, which introduced stricter guidelines for lenders, has led to two thirds (65%*) of NAEA estate agents reporting a decrease in the number of buyers.
“A drop in the number of buyers is the direct result of a slow-down in acceptance of mortgages, with it now taking an average of 50 days to receive a mortgage offer. This increases the risk that sales won’t go through and puts unnecessary pressure on any chain transactions.”
Andy Knee, Chief Executive of LMS says lender confidence has now increased and this year is for property professionals to grow the market now an established regulatory system is in place.
“A year on from the implementation of MMR, lenders have overcome any initial hiccups and have adjusted well to the new regime. Rather than erring on the side of caution like they might have done last year, lenders are now expected to grow their business this year, equipped with a firmer understanding of the lending criteria now in place.
“We also now have a more stable and healthier market than the one last year and during the recession. A recovering housing market and cautionary measures, while necessary, should not go too far the other way to the expense of those borrowers lying on the fringes or buyers aspiring to own their first home. It is a positive sign that lending to first-time buyers is the highest in seven-years, but the role of policy props such as Help to Buy have played their part and are limited in what they can achieve.
“The first year of the MMR was about creating a stable and secure market; with a strong regulatory system in place; the second year should be about unlocking the doors to home ownership for first-time buyers.”
How has your firm been affected by the MMR – are clients struggling with the stricter rules, or are they finding security from knowing the lenders are helping to ensure they have the means to make successful repayments?
Please share your thoughts in the comments section below.
*Figure from the NAEA’s March 2015 Market Report