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Bank of England
UK Mortgage Market
Intermediary Mortgage Lenders Association
Mortgage Market Review
Lenders and brokers operating in the UK's mortgage market have expressed concern over new rule changes set to come in this year and the effects that these could have on the market as a whole. In the past year plus, the level of lending has been hitting fantastic levels thanks to the low interest rates and increasing confidence, but could new rules have an impact on this? Many believe it will be the case as the new regulations sit just around the corner.The research that has been carried out by the Intermediary Mortgage Lenders Association (IMLA) into the Mortgage Market Review (MMR) rules set to take effect this spring found that two-thirds of brokers and a half of all lenders are worried about the impact of changes. The main concern among these groups comes from the fact they believe it will limit access to mortgages for consumers, marking a considerable drop in lending.It comes at a time when predictions are now starting to suggest that the Bank of England will start to ease up interest rates next year after five years of them being at the low level of 0.5 per cent. This could have an impact on the market alone, so when coupled with the MMR, concerns among lenders and brokers are not totally unfounded.The main point of the MMR changes will be affordability checks, with lenders needing to be far more sure than they were in the past that people can afford to pay back their mortgage. The responsibility for these checks will move from brokers to lenders officially from April 26th. It is designed to reduce high-risk lending. However, the number of lenders who believe this will not impact approvals has fallen from 73 per cent to 43 per cent in the last year, showing the growing concern."As MMR inches closer to reality, we are understandably witnessing a change in tune from last summer across the industry. The market is still in its early stages of recovery, and there now seems to be a growing consensus that the new regulations will have at least an initial dampening effect. In the short term, we are facing a likely drop in mortgage approvals as new practices are set in stone and while any remaining gremlins in new IT systems and processes are ironed out," said Peter Williams, IMLA executive director.
Are the new rule changes enough? How do the changes compare to much older, temporary regulatory changes in lending that were never reverted after the crisis in the '70's? Find out more here
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