Industry yet to see MMR impact
Speaking as the CML released its latest housing data, Paul Smee, director general of the CML, said: “The FCA’s new regulation of mortgages has now been introduced but it will still be some time until we can assess its effect on the market. The industry was ready for the transition, and already actively implementing many of the changes prior to April.
“We do not anticipate prolonged disruption to the market as a consequence. But we still see affordability constraints as an important factor in determining the level of demand for mortgages which we see over the next year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, agrees that it is too early to tell how MMR will affect the market. “It is too early to say what impact the MMR will have but it will ensure that affordability is not compromised as house prices continue to rise.
“Even if borrowers do lack prudence and want to overburden themselves with a mortgage that they will struggle to pay when interest rates rise, the new rules mean they simply can’t.”
Andy Knee, chief executive of LMS, believes MMR has already had an impact. “The latest CML figures show that even before its introduction MMR already began making changes to the market,” he said.
“Despite year-on-year growth, both home-owner house purchase and remortgaging loans have seen quarterly falls compared to the last quarter of 2013.
“Remortgaging was the first to feel the impact of MMR as lenders slowed lending in anticipation of the sweeping reforms, while a hiking of mortgage rates also discouraged many borrowers to swap deals.
“Responsible lending and affordability is clearly – and quite correctly – the phrase on everyone’s lips, but this must not come at the cost of aspiring homeowners, a group that already face steep obstacles to make the leap onto the ladder.
“But through effective use of MMR we can ensure the market continues to thrive, especially in the context of a stronger economic outlook with higher employment figures and lower inflation. “
Alan Cleary, managing director of Precise Mortgages, believes we will gain a greater idea of how MMR will shape the market over the next couple of months: “In recent weeks we’ve heard of a magnitude of hearsay surrounding the Mortgage Market Review’s impact.
“These new affordability measures have led to a heavy focus on financial minutiae including expenditure on meals out, haircuts, gym memberships and such like.
“In reality, we know lenders are unlikely to delve this deep. Although we really don’t expect the majority of lenders to conduct the new affordability checks any differently, we may well see evidence of borrowers shying away through fears of stringent checks and an unstable market in next month’s figures.”