Could MMR rules changes spell the end of the cheapest fixed mortgage rates?

Mortgage Market Review rule changes are due to come into effect in just four days. All mortgage applicants from this time will face a more intensive examination of their personal finances.

In the past applicants have been asked for recent bank statements and 3 months payslips, from Saturday they will be asked for much more to satisfy lenders.

Questions will be asked from how much is spent on the weekly shop, to how much is being spent on monthly childcare. This will apply to all applicants whether they are first time buyers looking to purchase a starter home to existing home-owners looking to remortgage.

With more questions being asked and more proof being required to back up an application, getting accepted for a deal could take far longer, and the concern is this could slow down the housing market as mortgages will be harder to get.

A further knock on effect of MMR rule changes could be the reduced availability of the cheapest fixed rate mortgage deals.

From Saturday lenders will be required ‘stress test’ all applicants to see if they could still afford the mortgage if rates were to rise to 7%. Lenders will therefore have to be very careful about rock bottom rates agreed for fixed periods, as when the deal comes to an end will the home-owner still be able to afford the mortgage? This factor may well lead to a trend for rising rates.

If you are looking for a mortgage after April 26, it will have to be on an advised sale basis. For the best impartial advice and a whole of market mortgage search, call 0800 048 8828 and speak to one of our advisers at Deal Direct.

It will soon get harder to get yourself a mortgage so call us for help.

For impartial advice call 0800 048 8828.