MMR has made lenders too risk averse warn brokers

Twenty-three per cent of a sample of 1,124 mortgage brokers from independent financial advisory companies and estate agents said that lenders are excessively risk averse.

However, brokers were divided on whether the risk assessments of mortgage borrowers are more accurate as a result of the MMR, with 45 per cent saying it is and 39 per cent saying it is not the case.

The administrative element of the MMR’s impact on mortgage brokers is also notable. Sixty per cent of brokers in the survey say that the rise in time spent on processing sales has been significant, whilst all agreed they are spending more time processing sales.

In August, the Bank of England’s Inflation Report showed that the MMR had impacted on mortgage approvals.

The volume of approvals in the second quarter averaged 64,000 per month, which was significantly lower than the 70,000 that the BoE had predicted in May, EDM Mortgage Support Services said.

Joe Pepper, managing director at the firm, said: “The MMR was always going to increase the administrative burden on mortgage brokers, it was just a question of how much. But the jury is clearly still out on whether the risk assessments under the MMR have actually been worthwhile.

“Improving the quality of the communication platform used by all parties to the transaction could certainly help both ease the administrative burden and improve the accuracy of the risk assessments, leading to higher quality mortgage business and possibly giving lenders more confidence to lend to borrowers.

Pepper added: “Nearly half - 43 per cent - of mortgage brokers say they would like to see all parties involved in mortgage transactions communicating via a single platform.

“Greater use of quality systems would certainly enable brokers and other parties to deal with large amounts of data with speed and accuracy, freeing up time for industry personnel to add value elsewhere in their companies.”