Mortgage lenders more selective post-MMR

Intermediaries think it is becoming more difficult for some customers to get a mortgage after the mortgage market review, research by Paragon Mortgages has shown.

The lender’s quarterly Financial Advisers Confidence Tracking survey shows that MMR had affected people borrowing into retirement, people wanting interest-only mortages and people with irregular incomes.

More than 90 per cent of intermediaries reported these people were finding it harder to get a mortgage.

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During the third quarter the average number of mortgages introduced by intermediaries was 22, down 3 per cent on the second quarter.

John Heron, managing director of Paragon Mortgages, said: “The market has seen significant structural changes following the MMR.

“This is a result both of the regulations themselves and the way in which the lending industry has responded to them.”

But compared with Q3 in 2013 there was a 12 per cent increase in the average number of mortgages introduced – although this was significantly lower than the 30 per cent year-on-year increase seen in Q2.

According to the research, intermediaries were more positive about the buy-to-let market in Q3, with nearly a quarter of all mortgages introduced being buy-to-let mortgages, showing a modest increase from 23 per cent in Q2.

Only 8 per cent of intermediaries said the availability of buy-to-let finance had become worse, compared with 12 per cent in the previous quarter.

An FCA spokesman said: “The MMR rules are about ensuring that everyone who takes out a home loan can afford to pay it.

“We always knew that there were certain groups of consumers who would be more impacted by the new responsible lending rules than others, such as those seeking interest-only mortgages, self-employed borrowers who had previously needed to self-certify their incomes, and those with a poor credit record.”

She added that since the start of 2013 and into Q3 this year lending has actually remained steady.

Adviser view

Andrew Jackson, a mortgage adviser with Hartlepool-based Wise Financial Planning, said: “The outcome of MMR was the onus has been put back on the lender to ensure responsible lending, and with that in mind they are being more thorough with their underwriting.

“Personally I think it is a good thing, because we are going to get to a situation where everybody understands the basic requirements when applying for a mortgage.”