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Mortgage hunters using brokers to combat unpredictable lenders

Increasing numbers of homeowners are turning towards brokers to secure a mortgage as conditions become more difficult for lenders.
Mortgage hunters using brokers to combat unpredictable lenders

 

The proportion of mortgages arranged by intermediaries rose to 62% between July and September, according to the Council of Mortgage Lenders (CML).

 

This is a notable increase from the 54% who used a mortgage broker in 2013.

 

The figures reflect the changing conditions imposed by the Mortgage Market Review, a set of new regulations introduced earlier this year to prevent irresponsible lending.

 

The regulations have lengthened the application process, at considerable extra cost to lenders. Lenders are now required to carry out lengthy interviews with new customers as part of the affordability check.

 

With only qualified advisers allowed to undertake this process, some lenders have come up short on resources, causing delays for mortgage customers.

 

Almost two in three are now turning towards a mortgage broker to make the initial enquiries before they go to the effort – and in some instances, the cost – of applying.

 

Credit Ratings

Customers are also wary of affecting their credit rating by getting rejections from lenders, with the new regulations causing some uncertainty about banks’ appetite for lending.

 

Some mortgage hunters have applied to reduce the size of their loan or lower their monthly payments but have still been turned down on the grounds of affordability.

 

The City regulator, the Financial Conduct Authority, and the Financial Ombudsman service are ready to step up the pressure on lenders to apply more common sense to their decision making.

 

They are keen to see consumers improving their debt situation even if they fail to qualify under the new MMR stress tests, especially where it is abundantly clear that the applicants are able to afford the loan.

 

Keith McDonald

Which4U Editor

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