Agents are reporting that even now, many weeks after the introduction, the rigorous and long-winded questioning process at the heart of the Mortgage Market Review is still causing horrendous delays.
This is directly leading to slow transactions, disagreements between vendors, buyers and agents, and ultimately fall-throughs too.
Here is a selection of what agents have told EAT:
A customer applying for a mortgage was questioned about his gambling habit after placing a few bets at the Grand National on one day out. He was required to provide full details and 12 months bank statements about any and all previous gambling instances, so that the bank could understand if he had a gambling habit - Kinleigh Folkard & Hayward.
One of our clients had been given money by their parents to help with a property purchase. They mentioned that some of the deposit was a gift, and it was immediately discounted on the basis that its status couldn't be verified as a gift as opposed to a loan - Stacks Property Search & Acquisition.
Private finance firms are telling us that MMR is causing problems for high net worth individuals. Even though the buyer may have millions to their name, these funds are often offshore and it is difficult to prove regular income. Couple that with extravagant spending habits and often the computer says No - Robert Bailey Property.
The industry fall-through rate is supposed to be around 30 per cent. In the last 18 months this has fallen to below five per cent. However the impact of the MMR is pushing this right back up again. In the last week alone we have had three deals falter - Roy Brooks.
Two clients meeting with a branch advisor recently had to show a full trail of their bank account statements for deposits as small as £1,000 transferred between their accounts. Gym memberships and service charges for flats are now a huge consideration, with many banks scrutinising payments to ensure affordability. Nationwide has started requesting 12 months bank statements from first time buyers living in rented accommodation, when going through a letting agent - Kinleigh Folkard & Hayward.
Even before MMR we were experiencing lengthy delays and there is no question that we are now feeling the full impact. The days of the mortgage surveyor or even the private surveyor arranging an appointment during the same working week of the instruction are long gone. Since the stealthy introduction of MMR, those delays have increased - Savills.
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Comments
Like all new legislation, MMR is having to wait for the dust to settle, when it will become sensible. What ever happened to 'let's get our mortgage sorted in principle, before looking to buy' It's about time gym memberships etc were taken into account. After all, they form a very substantial part of a mortgagees outgoings. If they want the property, they may have to do without for a while, until salaries rise. Should see fewer repros.
I kind of agree with Ray, but this whole process seems a case of returning things to where they were a decade or two ago That will of course take time. I'm not convinced that the alternative - banks lending recklessly and creating an irresponsible attitude towards personal debt is desirable either though.
Thoughts
The FCA have had to justify themselves - but the lenders are in such a pickle.
Disorganised and unable to cope with the requirements the FCA have implemented - they need to get their act together , stop changing goal posts and stop losing paperwork , properly trained staff are needed
This was always going to happen and I cant see how its going to change anytime soon. The MMR process is rigorous, exhaustive and long-winded, which means its going to take up much more time than it did before. That was entirely obvious from the start. Unless they find a way of making the process shorter and quicker, which wont happen in its current form, the long delays will persist.
That this would occur was very obvious from the start.
Box ticking 'Jobsworths' are now in control.