Why new mortgage rules are nothing to fear

What is it about the initials MMR?

MMR, for years, was synonymous with the much maligned and misunderstood measles, mumps and rubella jab that made so many parents anxious because of the possible side-effects of the vaccine in their children.

Now MMR is bringing up worry bumps in home buyers.

Believe the headlines and MMR (the Mortgage Market Review) - a tightening of lending rules to ensure mortgages are affordable to borrowers - is very bad news indeed.

The latest cause for concern, according to some media reports, are long delays in home loan-decisions due to MMR.

Would-be borrowers are apparently “having to wait weeks” to get their mortgage applications processed by banks and building societies, according to The Sunday Times and others. The “slow down” is allegedly being caused by lenders struggling to adapt to the new regulatory requirements and not having enough qualified staff.

But is that true? Are borrowers really waiting up to six weeks to get decisions on loans - and missing out on properties because of the delays? If you are looking to buy a house and need to get a mortgage sorted soon, should you be concerned?

The short answer is a qualified: no.

Mortgage expert Ben Osgood, from Nottingham Mortgage Services (NMS) believes the extent of mortgage delays resulting from MMR is probably being overplayed.

Some lenders may be suffering a backlog in applications as they adjust to the new MMR rules, but most are coping fine, says Ben.

MMR has not slowed down The Nottingham’s ability to process its mortgage applications, for example. As a responsible lender, the Society had sensible rules on “affordability” long before MMR made them a mandatory requirement.

As well as its own mortgages, the Society also offers “whole-of-market” mortgage advice - giving customers access to a wide range of products offered by rival lenders - through its NMS subsidiary. With up to 600 mortgage applications in the system at any one time, NMS are better qualified than most to monitor the market.

Numerous lenders suffer backlogs of mortgage applications from time to time, says Ben. A lender may be swamped by demand after launching a particularly competitive product. They may struggle to cope because lots of staff are on holiday or a flu bug has swept the office. Likewise, MMR may be having some impact on some lenders.

“There is always fluidity in the market. MMR has not changed that,” says Ben. “Problems only really come in when lenders fail to tell customers how long they will have to wait for a mortgage decision. Unfortunately, they are not always upfront with that information.”

A good whole-of-market mortgage adviser, such as NMS, can help you to avoid such problems because they are plumbed into the system. If you need a mortgage within a tight timeframe they will be able to point you in the direction of a competitive deal from a lender able to deliver it.

“MMR is often presented as this big, scary thing,” says Ben. “It doesn’t have to be.”

If you would like to find out more about mortgages or how MMR might effect you, call our mortgage advisers on 0344 481 0013

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