Intrusive interviews or common sense precautions?
We believe that buyers should be sensible, able to afford their mortgage payments and take into account possible interest rate rises, but as with many new dictats and legislative changes, there are consequences.
The new MMR (Mortgage Market Review) will take time and the property market is very “time conscious”. Buyers and sellers are traditionally impatient and there will be pressure and frustration. Three weeks before a first interview, another three after that before a formal decision and not a mortgage valuation in sight. If that becomes the norm, we will have some very grumpy people. Obtaining an AIP (acceptance in principle) at the very least will be crucial. So will the booming property market be affected by delays and fewer buyers? Is that what THEY want?
The new ‘big brother’ mortgage regime may have only just come into effect, but apparently it has already caused a slump in valuations. Applications will take longer to complete and include questions such as “how often do you eat steak” and “do you belong to a gym”. Both of which could change after the event of course.
A major Survey and Valuation team says the total number of valuations it conducted fell nine per cent in March from February, showing total activity levels to be 10 per cent below that recorded in March last year.
March is usually a strong month for valuations as the spring market heats up. But that just doesn’t apply this year. Lenders have had to devote serious time and resources to MMR, a spokesman explains.
Valuations on behalf of existing home owners seeking to move saw a relatively small dip down just two per cent in March from February – but it was the valuations conducted on behalf of first time buyers that saw a serious slump of seven per cent over the month.
Sensible as it sounds, if MMR has an adverse affect on transaction time, there will be consequences. The question is, will it be worse than finding that some home owners are unable to make monthly payments. Only time and interest rates will tell.