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Mortgage Market Reforms (MMR) in the UK are making it more difficult for certain customers to get a mortgage including over 40s and the self-employed, new research has confirmed. When the rules changed in April there were warnings that they could impact adversely on the home lending market and now research from buy to let lender Paragon Mortgages shows there was a 3% reduction in average mortgages introduced by intermediaries in the third quarter of the year. Intermediaries thought it was more difficult for certain customer groups to get a mortgage in the third quarter compared to the previous quarter and this comes after other firms have reported difficulties for people aged over 40 trying to secure a mortgage. The specialist lender’s quarterly Financial Advisers Confidence Tracking (FACT) survey highlights intermediaries’ views on the performance of the mortgage market, also revealed that people borrowing into retirement, people wanting interest only mortgages and people with irregular incomes have experienced difficulties. Indeed, the stark figures show that more than 90% of the 186 respondents in each case reported these difficulties. During the third quarter the average number of mortgages introduced by intermediaries was 22, which was down 3% on the second quarter. Nevertheless, compared with the third quarter of 2013, this shows a 12% increase in the average number of mortgages introduced. This, however, was significantly lower than the 30% year on year increase seen in the second quarter. Intermediaries appeared more positive about the buy to let market with 24% of all mortgages introduced being buy to let mortgages, a modest increase from 23% in the second quarter of the year. In particular, 43% of intermediaries surveyed thought the availability of buy to let finance had improved since the second quarter, a significant increase of 7% over the period from 36%. In addition, only 8% of intermediaries stated the availability of buy to let finance had deteriorated, compared with 12% in the previous quarter. ‘The market has seen significant structural changes following the Mortgage Market Review. This is a result of both the regulations themselves and the way the lending industry has responded to them,’ said John Heron, managing director of Paragon Mortgages. ‘This could be one factor behind the softer levels of business that intermediaries are reporting in the third quarter. Indeed CML data shows us that buy to let lending was up 14% in quarter three compared with quarter two, and up 24% on the third quarter of 2013, which could suggest that the buy to let market is proportionally more important for lenders in the current market,’ he explained. ‘A healthy availability of buy to let finance is significant to maintaining a competitive and high quality Private Rented Sector, so it is pleasing to see increased confidence amongst intermediaries, for this type of business,’ he added. Continue reading →
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