The Aston Mead estate agency says “unnecessarily restrictive mortgage criteria" have caused the number of home loans to drop sharply in the first quarter of 2015 - with the volume of transactions falling almost as much across the industry.
The latest figures from the Council of Mortgage Lenders indicate that there has been a sluggish start to the year, with mortgage lending for the first quarter down 12 per cent on the previous three months.
The National Association of Estate Agents agrees, saying that offers are now taking an average of 50 days before they are issued.
Aston Mead managing director Charles Hesse says that for a vendor to have to wait for over seven weeks before their buyer receives a mortgage offer is “simply ludicrous” and “the single biggest cause of the drop in the number of buyers out there.”
Hesse says that while it is important to ensure that mortgages are affordable “the current system is so draconian that it’s preventing some perfectly eligible people from getting a mortgage at all.”
He adds: “It’s not as if the market was flooded with repossessed properties – even at the height of the recession.”
Hesse says mortgage companies should introduce a more tailored approach to lending, better suited to the wide range of applicants.
“For older buyers in particular, not to be able to include assets and savings in their assessment - other than any rental income - is patently absurd. And this is just the tip of the iceberg. Unless changes are made, the next generation is going to be saddled with this problem too” he claims.
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It's a tough one. You want it to be regulated to a degree, so we avoid the mortgage free-for-all that played a part in the global financial crisis. But at the same time you don't want regulation that is too draconian and massively slows down the process of any purchase.
I think the MMR is a good idea in principle, but it's gone too far the other way. Some of the questions they ask and the checks they make are way over-the-top.
We need to make mortgages more affordable and easier to acquire, but that will only happen with the rollout of a full-on, government-backed house-building drive to up supply and bring prices down. The situation now, with house prices going out of control in certain areas of the country, means that people are having to take out bigger mortgages which they are less likely to afford. If the property market were to crash again, we'd have another big problem with negative equity.
For first-time buyers, it's becoming increasingly difficult to get on the ladder - they are struggling to cobble together deposits and mortgage lenders are less reluctant to lend.
MMR is the reason for the slowdown in mortgage approvals. It could be a good idea in theory, but the current guidance is way too stringent. Are spending habits on haircuts and socialising really relevant to being approved for a mortgage?
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