A specialist property law firm is warning agents that they should expect delays to be caused by the Mortgage Market Review, which comes into effect in 10 days time.
DC Law says that while lenders update their systems and train their staff to reflect the new MMR requirements, estate agents and would-be buyers will suffer slower processes.
Solicitors are already experiencing high volumes of transactions caused by the steep upturn of demand. The implementation of MMR is adding to this workload. Where mortgage offers have already been issued, any change in circumstances could create further delays while the borrower goes through the new processes, says Beth Rudolf, DC Law's managing director.
There is also the added risk that the longer the home purchase takes, the more likely the chances of the seller or the buyer pulling out, she warns.
It's hard to under-estimate the change that lenders will undergo thanks to MMR.
For the first time they will be regarded as fully responsible for assessing whether the customer can afford the loan, and they will have to verify the customer's income. They can still choose to use intermediaries in this process, but lenders will remain responsible.
Lenders will still be allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.
There are transitional provisions in the MMR that allow lenders to provide a new mortgage or deal to customers with existing loans who may not meet the new MMR requirements. In these cases the borrowing will not be able to exceed the amount of their current loan, unless funding is required for essential repairs.
The decision on whether or not to lend in these cases will remain with the lender.
On the basis of trials undertaken so far, this may mean two interviews for some borrowers - who of course may then be turned down anyway - so agents are gearing themselves up for slower completions from next month onwards.
Whether these more complicated processes will speed up over time remains to be seen.
.png)
%20A%20property%20tale%20for%20our%20times.png)
Comments