Home buyers have not heard of the imminent changes to mortgage lending, have no idea what is in store, and could be upset by “third degree” questioning.
Speaking at yesterday’s Great Housing Debate in Westminster, organised by the Wriglesworth consultancy, Anne Ashworth of The Times said there was widespread ignorance of the Mortgage Market Review.
MMR, which kicks in on April 26, will mean that mortgage applicants must be questioned in depth as to their ability to repay the loan both now and in future.
Ashworth, who edits The Times Bricks & Mortar supplement, said that some lenders have already implemented MMR practices.
“When I recently applied for a remortgage, I was asked how much I spent on my lunches during the week,” she said.
In fact, she said, she usually had a sandwich at her desk.
But, she emphasised, it is this kind of question that mortgage applicants can expect in future – and might find intrusive.
She said: “Before I came to this debate today, I asked some well-informed people about MMR. None knew what it was.”
She added: “I also think that lenders will find the admin hugely onerous.”
Peter Dockar, head of mortgages at HSBC, also warned of disruption after MMR comes in, saying there could be a possible mortgage drought.
Elsewhere in the debate, a member of the audience asked whether Help to Buy’s shared equity scheme, available on new-builds and where purchasers have to repay the loan, could be the “next mis-selling scandal waiting to happen”.
Mortgage guru Ray Boulger replied – from the audience – saying it was “outrageous” that the scheme was exempt from regulation.
He said: “The only second charge loan excluded from regulation is the Government’s own.
“I expect a lot of people who have taken out the loan are not familiar with its terms and conditions.”
Also speaking from the audience, Michael Day, of estate agency consultancy Integra, said that this could be the last big year for house prices.
He said that while he expected house prices to continue rising throughout 2014, this could slow.
“There is a general election coming up, there is a great fear of Ed ***** getting anywhere near the Treasury, and interest rates have only one way to go – up.”
* Source Propertywire