First-time buyers feel impact of new lending rules

January 4, 2015 by Brendan

Borrowers

Following the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review (MMR) in April 2014, which was undertaken by the Financial Conduct Authority (FCA), new figures released by chartered surveyors e.surv show that the number of those with a smaller deposit – predominantly first-time buyers – has dropped by almost a third.

November saw just over 8,200 mortgages approved with a deposit of less than 15%, which was a fall of over 30% since October. With the current state of house prices, first-time buyers often request higher loan-to-value borrowing without the additional equity from an existing house sale to support them, instead relying solely on savings or family support.

When the MMR was undertaken, it saw lenders tighten their affordability calculations with a more detailed analysis of an applicant’s income and expenditure, and an incorporated stress test to establish if payments could be maintained should they increase to rates of 7%.

They have also felt the additional restrictions enforced by the Bank of England. It has said that lenders should limit their ‘lending loan to income’ ratio of 4.5 times salary to around 15% of their total lending.

With so many changes, it is no wonder that many people, particularly first-time buyers, find the buying process overwhelming. As a qualified mortgage professional, you will be the first port of call for those looking at buying a property. Having achieved the recognised qualification at the end of your CeMAP training, your customers will trust your advice and look to you for an honest and transparent assessment of the most suitable mortgage package for their individual circumstances.