Mortgages  

CML issues guidelines to improve MMR awareness

With less than two months to go before the MMR comes into force, a CML newsletter warned that while many firms were already applying parts of the new rulebook, many consumers were unaware of the changes and what they will mean.

Highlighting how the MMR could affect borrowers, the newsletter warned that taking out a mortgage could take longer than previously. The new rules may also affect how much can be borrowed and consumers should be prepared to provide more details about their incomes and expenditure.

It added that prospective homeowners would have to provide a credible repayment strategy for repaying interest-only mortgages, while the rules on execution-only transactions would also be tightened.

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Citing the FCA’s desire to “reinforce consumer protection”, it said: “Borrowers will see benefits from greater consistency in the approach to assessing whether the mortgage is affordable and appropriate to individual needs and circumstances.

“But they will also see a process that is more intrusive and onerous than they may have experienced in the past.”

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said: “The move from non-advised to advised sales is a big change for the lenders; less so for the intermediary market.

“There is an increase in requirements over affordability, but I don’t see it as a big challenge for our members.

“The surprise will come for many bank customers who were previously sold mortgages on a non-advised basis.”

Key points for consumers post-MMR

• Be prepared to provide more details about income and expenditure.

• The new rules could affect how much can be borrowed.

• The application process could take longer than before.