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Mortgage offer process slowdown is due to MMR

Following the implementation of changes outlined in the Mortgage Market Review the mortgage application process has slowed significantly in 2014 according to the Mortgage Efficiency Survey, conducted by IRESS.

The survey discovered that just 9% of mortgage offers are produced within five days, compared to 13% in 2013, having analysed the responses of lenders comprising 66% of gross lending in 2013.

Currently only 44% of mortgage offers are now produced within two weeks, somewhat slower than the average of 56% a year ago. It now takes more than thirty days for customers to receive an offer in one in five cases.

Henry Woodcock, Principal Mortgage Consultant, IRESS, said: “There’s no doubt that the MMR has taken its toll on the time taken to secure a mortgage. 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. That said, demand for mortgage finance has been so strong in the year so far that lending has continued at a rate of knots despite the disturbance.

“However, one thing is clear. Intermediaries have played an increasingly important role helping consumers navigate the murkier waters caused by regulatory change. We are likely to see lenders develop their execution-only offerings in the coming year, but that won’t diminish the part being played by brokers in securing the best outcomes for customers.”  

The intermediary channel is proving to be an effective route for buyers, with 70% of their applications going to offer, up from 62% a year ago. Whilst across all channels, on average, nearly 40% of mortgage applications do not proceed to offer.

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