May 29th, 2014
Mortgage approval rates in the UK have dropped for the third consecutive month, according to the British Bankers’ Association, in the first tangible sign of how the Mortgage Market Review has impacted the industry.
Following wholesale changes in the way that mortgages are underwritten, this recent news from BBA suggests that, as feared, borrowers are finding it more difficult to obtain mortgage funding.
This follows horror stories from many clients of three-hour long appointments in branch, going into minute detail on anything from utility bills to the cost of milk deliveries.
This also shows that, though the final deadline for implementation of MMR criteria was 26th April, lenders were gearing up for the change well in advance.
“The headline date of 26th April was simply the final deadline on which lenders had to be MMR compliant. In reality, lenders had introduced their new processes and measures well in advance of this, some as early as March,” said Andy McBride, Business Development Director at specialist broker Contractor Mortgages Made Easy.
“Ironically, while the number of mortgages being approved has fallen by nearly 7% (down to 42,173 approvals in April, from 45,045 in March), the gross value of mortgage lending has actually risen to £12.2bn, the highest since early-2008.”
“This would suggest something of a sea change in the market, as areas that were previously seen as high-risk lending, such as freelancers or those working on short term contracts, are actually underpinning the market, with arrears virtually non-existent amongst the Contractor fraternity.”
The positive side of MMR for Contractors, is that with underwriting now extremely detailed on all applications, whether you are a permanent employee or otherwise, there is now more focus than ever before on affordability.
For most, this could be a problem, however for Contractors with higher than average levels of disposable income, it’s a welcome sign that banks and building societies are starting to wake up to the reality of contracting.
That now means that in essence, you are able to transfer the skills and experience that you have on your CV, across to your credit profile.
“By utilising a specialist broker, you can unlock the previously unavailable borrowing potential based on the value of your contract, rather than your taxable income,” said Andy McBride.
“With a bespoke pre-underwriting process, the right broker can ensure that not only can you borrow what you need, but it comes without the added headache that many are experiencing at present.”
“A most welcome pain relief, in a world full of financial stress.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080