Figures released this week by the Bank of England show mortgage approvals have fallen by a staggering 12.3% year-on-year, in the first indicator of market position since April’s Mortgage Market Review (MMR).
Statistics show that 61,267 mortgages were approved in September, the lowest since July 2013.
“This is really the first indicator of where we are in the market post MMR” said Robin Taylor, senior consultant at specialist broker Contractor Mortgages Made Easy.
“The application of MMR caused several banks processing nightmares, and whilst we’ve seen the worst of that now, this is the end result.”
Lenders failing to grasp the key concepts of MMR and being unable to process applications in a timely manner are the main contributing factors, says Taylor.
“While the overall concept of MMR was certainly positive – nobody can argue with affordability being at the forefront of consideration when borrowing several hundred thousand pounds – lender interpretation of it left a little to be desired.”
“The biggest problem was the withdrawal of non-advised sales from the market. This meant that lenders had to see direct applicants face-to-face in branch, often for several hours. Because few lenders had sufficient staff, this led to delays in arranging said appointments, followed by excess spending on training up staff to the required level.”
“Whilst in theory this is good news for Brokers – by allowing us to do the leg work on affordability assessments for you, it eliminates the need for this appointment with lenders directly – the knock on effect is that processing slowed down tremendously whilst banks struggled to cope with the backlog.”
Thankfully, most lenders have now recovered to normal processing levels, so what is the state of the market for Contractors now?
“The landscape for mortgage funding for Contractors now, post MMR, is extremely positive” said Robin Taylor. “Even since MMR, we have seen several lenders, such as Leeds Building Society, open up their lending criteria to enable Contractors to use them.”
“There is now more choice than ever before if you’re a Contractor looking for mortgage funding, and with banks struggling to hit aggressive lending targets in the wake of MMR, we are seeing several short-term ‘flash’ sales on rates, offering tremendous value - such as Halifax’s sub-3% fixed rate for those with just a 10% deposit recently.”
There is a warning to caveat the positivity in the market at present, however, as Robin explains.
“By their very nature, these great value deals do not hang around for long. By waiting to hear about them and then enquiring further, it’s inevitable that many will miss the boat. Engage a specialist broker now in order to assess your potential with specialist underwriting teams, so that you can be at the front of the queue when exclusive deals are released.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080