The most thorough research yet into the effect of MMR on the housing market shows a significant increase in the time it takes for buyers to receive offers.
The Mortgage Efficiency Survey conducted by IRESS - a supplier of wealth management, mortgage and financial markets systems - shows that just nine per cent of mortgage offers are produced within five days, compared to 13 per cent last year.
This trend has accelerated as more stringent affordability and plausibility tests have been introduced. In 2012, one quarter of offers were produced within five days.
Only 44 per cent of mortgage offers are now produced within two weeks, much lower than the average of 56 per cent a year ago. It now takes more than 30 days for customers to receive an offer in one in five cases.
There's no doubt that the MMR has taken its toll. More comprehensive affordability testing and lengthier interviews have slowed the application process. Added to which, much of this remains a manual process among lenders as they adapt, exacerbating the problem says Henry Woodcock, principal mortgage consultant at IRESS.
This has not curbed mortgage demand, he says, which has been so strong in the year so far that lending has continued at a rate of knots despite the [MMR] disturbance.
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Comments
I think you've hit the nail on the head, Richard. MMR will inevitably slow things down, but if that stops the free-for-all we had before, with people buying houses with mortgages they could ill-afford, then that surely has to be a good thing Unrealistic offers should become a thing of the past.
That sounds like good news to me. Maybe the situation will develop whereby it becomes standard practice for mortgage applicants to start the process before actually finding a property to buy. Get the in-principle decision, then find the property the mortgage allows them to afford, then, if necessary, a final check to make sure their circumstances haven't changed. It also helps the market, by limiting unrealistic, unaffordable offers.
Is there a critical failure in that proposition