The Value of Advice
Posted on 9 June 2014
Yes, the mortgage market has been vaccinated and the similarity in names is uncanny. MMR stands for Mortgage Market Review. MMR will shape the market for lenders and borrowers alike – but the team at John Charcol are here to help you navigate the new terrain.
The Mortgage Market Review was quietly undertaken in 2009 by the now redundant FSA, (Financial Services Authority), and was completed by its replacement, the FCA (Financial Conduct Authority). The findings from the review were implemented on 26th April 2014.
· The financial crash in 2008 was wildly blamed on mortgages and irresponsible mortgage-lending; therefore it was not a surprise that the almighty regulator decided to do something about it. It has taken them five years to complete their review, during which time the mortgage market seemed to be whizzing its way to recovery, with indicators showing steady economic growth and sustainable house price recovery. The question is, will this buoyant market be adversely affected by the new rules? The major change for borrowers is that MMR introduces compulsory affordability assessment on applications and lenders and brokers will have to check if a client is eligible according to new, fine-tuned mortgage lending criteria and affordability checks. Budget planners will be in fashion and income and expenditure will be scrutinised. With this comes the demise for self-certification, non-status mortgages, as these will be banned.
· Furthermore, the lenders will apply mandatory ‘stress tests’ by assessing the income on the basis of possible future rates increases. What that will mean for you, dear readers is, that even if you are applying for a mortgage at 1.69%, the lender will take into account mortgage payments at a rate of say, 7% when assessing whether the loan is affordable now and in the future.
· The good news for borrowers is that the FCA would like to make sure that all borrowers receive advice by a member of staff who holds a relevant professional qualification. They are banning execution-only sales with only few exceptions. Much Ado suspects that many of the changes will create interruptions and ripple waves, but do not fear as our advisers are here and as always they are ready for the change.
In fact, we have been ready a long time. All of our advisers are qualified mortgage brokers and we take particular care when assessing your circumstances to make sure we recommend the product that is most appropriate for you...For the past 40 years we have been quick to learn and adapt to changes in market conditions and lending practices, and our clients have always had the comfort of knowing that John Charcol is independent and working with the clients’ best interests in mind.
To find out how the changes will affect you, speak to your dedicated consultant today.
Categories: Mortgages London
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