Opinion  

MMR: Prepare for the rush

Kevin White

The Council of Mortgage Lenders published a handy guide this week on the subject, warning consumers it may take longer to complete applications, and while lenders claim they are ready, it will be interesting to see the effect they have on the housing market and consumer appetite, with the CML conceding that more could be done to educate the public.

I’m sure when you ask the man on the street what they associate the letters MMR with, tightened mortgage regulation will be far from the answer.

Indeed, when I first started writing about financial services two year ago, the words MMR filled me with the dread of having to endure childhood vaccinations in a damp primary school in Wales.

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But as we know, this particular MMR concerns the increasingly onerous hoops we’ll all have to jump through to get a mortgage, or even to remortgage, as lenders are forced to look at our expenditure before making a decision on how much we can borrow.

The FCA says the rules will reinforce consumer protection, and offer borrowers greater consistency, but the danger is that we’ll see a massive spike in the housing market this month before it falls off a cliff after April as mortgage applicants flounder in a sea of delays and disappointment.

Adrian Anderson, director of London-based mortgage broker Anderson Harris, said as much this week, by claiming the introduction of the MMR could “have a dampening effect and slow the market down for a couple of months as all the detail is implemented”.

He added that this could create problems for a busy housing market such as London in particular as it will have an impact on lenders’ ability to deliver.

Cash buyers will become even more desirable as far as vendors are concerned as they won’t be impacted by any potential delays in arranging mortgage finance, further distorting the market.

Nationwide has already imposed a deadline of 14 April for any pre-MMR applications. Anything received after this date will have to be reassessed under the new rules, so expect a rush of applications and disgruntled brokers over the next few weeks as lenders struggle to cope.

Mr Anderson added that buyers who “find themselves in a contract race or having to move quickly may struggle to get their mortgage arranged in time”, while another London-based broker told me this week that several lenders were already struggling to process mortgages due to the upsurge in business, with an average backlog of five days.

The next few weeks could be interesting.