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Research highlights disappointment for almost half of prospective homebuyers PDF Print E-mail
Thursday, 28 May 2015

Almost half (45 per cent) of people who planned to buy a property since the introduction of the Government’s new affordability rules last year have failed to do so.

The findings indicate that continued confusion means many people have been disappointed since the introduction of the new rules through the Mortgage Market Review (MMR). A quarter claim that the MMR has impacted their ability to buy a property, while a third (37%) report that the changes have made them feel less in control of securing a mortgage. These findings are revealed in Experian’s latest insight report, The Mortgage Muddle – One Year After The MMR.

In a separate study, The MMR Muddle, conducted by Experian in April 2014, just 44 per cent of those surveyed were aware that the MMR would mean that lenders would be more careful about ensuring mortgage applicants could afford their repayments. And one year on, it appears that this “Mortgage Muddle” is continuing to affect many. Of 1,500 respondents who either bought or planned to buy a property in the last year:

·        62% were not aware that lenders may require bigger deposits (worryingly, 23% believe they could apply for mortgages with smaller deposits than before);

·        37% didn’t recognise that lenders would now be more careful on whether they could afford repayments;

·        15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR.

Failing to prepare

The research went on to reveal that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. Almost half (46%) have no indication of how a lender might view their ability to repay money, having never checked their credit report.

Further insight reveals that of those who were unable to buy in the last year:

·        13 per cent do not know how much money they have left over at the end of the month;

·        18 per cent don’t know what monthly repayments they can afford;

·        14 per cent did not have a big enough deposit for the property they wanted;

·        12 per cent were unable to secure the size of mortgage they needed.

Paul Russell, Director of Analytics for Experian’s Decision Analytics, comments: “One in ten of those who were unsuccessful with their mortgage application do not know why or haven’t asked their lender, leaving them at a significant disadvantage when it comes to improving their chances of being accepted in the future.

“Lenders are clearly trying to make sure that any decision to lend does not cause a person to fall into unmanageable debt. However, there is more that the industry can do by helping those individuals who didn’t qualify to understand why and by offering advice on how they might be able to turn things around.”

Experian’s Mortgage Application Guide is available at www.experian.co.uk/improve. It outlines what steps to applicants need to take and when to take them to help people to give themselves the best chance of being approved for the mortgage they can afford at the best rate.

(Source - Experian News Release)
 

 
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