Home buyers have not heard of the imminent changes to mortgage lending, have no idea what is in store, and could be upset by “third degree” questioning.
Speaking at yesterday’s Great Housing Debate in Westminster, organised by the Wriglesworth consultancy, Anne Ashworth of The Times said there was widespread ignorance of the Mortgage Market Review.
MMR, which kicks in on April 26, will mean that mortgage applicants must be questioned in depth as to their ability to repay the loan both now and in future.
Ashworth, who edits The Times Bricks & Mortar supplement, said that some lenders have already implemented MMR practices.
“When I recently applied for a remortgage, I was asked how much I spent on my lunches during the week,” she said.
In fact, she said, she usually had a sandwich at her desk.
But, she emphasised, it is this kind of question that mortgage applicants can expect in future – and might find intrusive.
She said: “Before I came to this debate today, I asked some well-informed people about MMR. None knew what it was.”
She added: “I also think that lenders will find the admin hugely onerous.”
Peter Dockar, head of mortgages at HSBC, also warned of disruption after MMR comes in, saying there could be a possible mortgage drought.
Elsewhere in the debate, a member of the audience asked whether Help to Buy’s shared equity scheme, available on new-builds and where purchasers have to repay the loan, could be the “next mis-selling scandal waiting to happen”.
Mortgage guru Ray Boulger replied – from the audience – saying it was “outrageous” that the scheme was exempt from regulation.
He said: “The only second charge loan excluded from regulation is the Government’s own.
“I expect a lot of people who have taken out the loan are not familiar with its terms and conditions.”
Also speaking from the audience, Michael Day, of estate agency consultancy Integra, said that this could be the last big year for house prices.
He said that while he expected house prices to continue rising throughout 2014, this could slow.
“There is a general election coming up, there is a great fear of Ed Balls getting anywhere near the Treasury, and interest rates have only one way to go – up.”
Editor’s note: Eye’s software, which will not allow rude words, insists on placing asterisks for the surname of the Labour politician whose first name is Ed and who is married to former housing minister Yvette Cooper.
May I offer Eye three possible solutions to the problem that is Ed B@lls:
1. Do as above.
2. In the event of him becoming Chancellor, alter your software to allow the torrent of abusive words that would inevitably follow.
3. Henceforth call him Mr Yvette Cooper.
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I need EYEs miracle software in my office, attached to my vocal chords. ;o)
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The fact is house prices have been running ahead of inflation much too soon after the biggest financial crash within most people's lifetimes.
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EYE – your software has failed.
It has allowed complete, utter cr@p to be posted. ******** of the highest order, in fact. You know, the usual MDT by Mr RR.
You need it tweaked.
There again, now that I have left the other site, maybe you should let him continue.
I need something to gnaw at… ;o)
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Hi PeeBee, I'm going to take you to task on that one, the post above is actually a valid comment. I realise things may be different in the frozen north, but here in the east, we are seeing definite evidence of a market rapidly overheating. Next time I see a first time buyer, I'm going to have them stuffed and mounted as they are a dying breed round here!
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Hi Hound. So… you think that my MDT alarm went off simply because it was sent by the person?
Maybe it is set too sensitive. The smoke he blows just tips the balance every time.
Or maybe – just maybe – I now what's coming next off the chap.
He's been typing more drivel on his woeful blog – so expect some frantic cutting and pasting on here… and don't say I didn't warn you and try to nip it in the bud to save the assault on your eyeballs in the process!
PS – stuffing and mounting of FTBs is only allowed from 3 July to 2 September – or they WILL be a dying breed! ;o)
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Whoa! Hold on a minute!
Its not valid at all. RR's throw away comment has literally nothing to do with the article which is about checking the suitability of mortgage advice and more stringent affordability checks.
RR's personal reasons as to why he thinks house prices are to high are already well documented.
(to sum up: he cant sell any)
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As some people are listening or reading my views correctly (ta hound), I'll publish more detailed insight here.
Housing Market – The Short-Term Future:
In order to read and understand this explanation, the definition of two terms, in particular, need to be clearly understood:
Prices: These are figures quoted by those attempting to sell houses in the market. Whilst those deciding them may attempt to fix them close to the current market value, they do not,
necessarily, match market value even closely.
Values: The figures that are decided by the housing market and which depend upon actual sales or purchase transactions having been completed in the recent past, which set their levels. No-one determines these, only the market decides. Measuring these, at any given time, is a skilled job.
Whilst this particular market has been manipulated by political ideology for some while now, it seems that the same old price extremes are both alive and kicking!
Unfortunately, it also seems that the window of opportunity for market improvement, by way of causing a reduction in these extremes, is now passing, until the economic price-cycle starts repeating, once again.
The effect of this is likely to be that owing to the excessive and escalating asking prices seen in the recent past, more owners will attempt to sell this summer and if that happens, plenty of 'For sale' boards should be seen.
(Almost the opposite extreme to the situation at the end of last year.)
What usually happens in this situation is, that when comparatively large numbers of houses go up for sale, if too high a price is being asked, the value of houses will fall in the shorter term.
The effect of this is, as the supply of houses available to buy increases (i.e. the volume), if buyers aren't sufficiently able to meet the prices being asked, sale values, (or prices actually achieved), will start falling.
In this situation, by the end of the year, we could see the emergence of a buying opportunity.
For more on this you will need to subscribe to my main blog but I hope you enjoyed this anyway.
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