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Mortgage Market Review

Written By On 25/04/2014

The Financial conduct Authority have felt it necessary to put tougher measures into place for the best interests of the clients. The FCA commented that the new application process has been installed to 'hardwire common sense' into the system.

The 'stress test' will be a lot more comprehensive and involve more personal questions including household shopping costs and clothing expenses.

The Council of Mortgage Lenders believe that the new procedures will not be as difficult as some are anticipating. However brokers have more concerns about mortgage acceptance rates. Some are predicting a longer waiting time scale with less loans being approved.

The new set of rules has been titled the Mortgage Market Review. The MMR was created a while ago and was meant to come into operation mid 2013, but has been delayed until now.

City watchdog chief executive Martin Wheatley delivers a very simple and straightforward message:

The core principle is a very sensible one - lend to people what they can afford to repay.

Loan applicants shall need to be much more specific about all sorts of spending habits, whilst lenders will scrutinise the customer's outgoings in comparison with income to make sure they can afford repayments.

But it will not be enough just to show they can afford their current monthly instalments - they will also be assessed to ensure they would be able to afford higher sums to buffer anticipated interest rate rises.

The Building Societies Association are saying that there is no reason for people to panic. They state that customers who are unable to secure larger deposits on their homes will not necessarily be affected.