Research also shows that of those who have heard about the new rules, 18% don’t understand what it could mean for them, 30% only think they know.
The rules are already showing signs of having an effect on the property market as estate agents report processing delays and some first time buyers failing the new tests.
‘The Mortgage Market Review is designed to keep a tighter rein on borrowing and early reports suggest that it’s already slowing up the application process for lenders and home movers,’ said Matthew James, head of communications at Rightmove.
‘Given that a third of people either don’t know about it or understand it, even more delays are likely. Our advice to anyone looking to secure a mortgage, especially first time buyers, is to give yourself the best chance of passing the new rules by doing some research before applying for a mortgage,’ he explained.
‘While the new rules are likely to prevent some prospective buyers from getting a mortgage, we think that the delays we are currently hearing about will ease over the coming months as lenders, advisors and applicants all adapt to the new landscape,’ he pointed out.
‘However, should MMR continue to affect a large number of applications and drive volumes down, then it could drive buyers out of the market and force sellers to moderate their prices and take some of the heat out of the current demand in some areas,’ he added.
According to Ken Hume of James Alexander in South London, the new rules are going to give an edge to buy to let investors and impede first time buyers more than is necessary. ‘We have many highly reliable tenants who have been renting for years at far higher figures than any mortgage stress test will allow and the equivalent mortgage would be considerably less, even taking into account any interest rate rises,’ he said.
‘The new rules could unreasonably impede many buyers who are hoping to get a step on the housing ladder now,’ he added.
Peter Slack of Harris Bell in Yorkshire, revealed that lenders who adopted the rules early have already had some first time buyers fail the affordability assessment, despite the fact that they have between a 10% and 15% as a deposit and an otherwise clean credit record.
‘Many of these potential buyers have incomes that would have previously allowed them to obtain a mortgage and in a few cases the proposed new mortgage is considerably less than the rent they have been paying for the last few years,’ he pointed out.
