Fears that new mortgage lifestyle quiz will cause delays

By Lauren Burns

A new lifestyle quiz that will form part of the mortgage application process from Saturday 26th April has been described as "the biggest change to the mortgage market for more than a decade", but financial brokers are concerned that it will cause even more delays for applicants.

Mortgage applicants will now be questioned in more detail about their outgoings in an attempt to get a better picture of their ability to afford a mortgage, especially if interest rates should increase in the future. The new Mortgage Market Review (MMR) was created during the financial crisis and was intended to be implemented last summer.

Chief executive of the Financial Conduct Authority (FCA), Martin Wheatley, says the "core principle" is to "lend to people what they can afford to repay". He points to 2008-09 in particular as a period of time when affordability was not at the forefront of the mortgage application process, and says that if interest rates were not frozen for so long "we'd see a lot of foreclosures."

Mortgage affordability has previously been based on multiples of an applicant's income, with large monthly outgoings taken into consideration. The new questions will look at monthly subscriptions, the amount of spare money available, and will also attempt to factor in changes over the immediate mortgage term. Applicants will be asked to share if any future increases in spending or income are expected, and the lenders will also have to assess how the applicant's ability to the mortgage will change if interest rates change over a 5 year period.

Mortgage brokers have expressed concern that the new questions will add further delay to what is already considered a very lengthy process. Others have also suggested that the number of mortgage applications being rejected will increase as a result of the changes, with some criticising that the new calculations will factor in non-essential outgoings but not consider that the mortgage applicant would probably cut back on such expenditure if it became necessary.

If you are buying, selling or remortgaging a property in Northern Ireland, and require a conveyancing solicitor to handle the legal process for you, contact Wilson Nesbitt in Belfast by calling 0800 840 9290.