The Observer reported this weekend that a tightening up of rules regarding affordability and the withdrawal of cheap lending will mean mortgages are harder to secure this year. The Mortgage Market Review comes into force in April, and brings with it stricter rules from the Financial Conduct Authority, meaning lenders will be forced to look at borrowers’ finances in greater detail. Homeowners will also be stress tested to see if they can afford the required mortgage at a higher interest rate.
The Help to Buy initiative also featured in this weekend’s financial press, with the Financial Times revealing that lenders including Santander and Halifax are not allowing borrowers to purchase a new build property using the Help to Buy Mortgage Guarantee scheme (Help to Buy 2). Experts in the Times warned that only a small percentage of borrowers are being accepted for the Help to Buy 2 scheme due to strict criteria and credit scoring, but acknowledged that the benefit of its introduction has been felt beyond the Government guarantee by stimulating competition in the mainstream market.
Elsewhere the Telegraph followed up on news that landlords are increasingly refusing to let properties to tenants on benefits. Brokers suggested that this type of tenancy has always restricted the choice of mortgage lender, and with changes to the benefit system, landlords are likely to turn to a different market.