From April, new “affordability rules” are coming into play which could majorly boost the amount of mortgage rejections.
New guidelines by the City regulator as a consequence of the Mortgage Market Review will see lenders looking into the incomings and outgoings of potential borrowers to ensure that they can pay back the interest tabbed onto the mortgage loans they wish to take out.
Estimates at the moment stand that a third of the people who would be granted a mortgage currently will drop by a third in the months following April, leading to many disappointed would-be households.
The aim is to stop borrowers taking on more than they can reasonably handle. But fears amongst experts are that this will once again halt the recovery of the housing market and throw a major spanner in the works.
Apparently the new vetting system will include questionnaires that will judge potential borrowers on such things as whether they have pets, histories of gambling, and even how often they go out to eat in restaurants.
These new guidelines could well affect new homeowners by largely increasing the deposit needed, and people seeking to transfer mortgages. However, it should also prevent people from getting into majoe debt arrears.
The guidelines are not yet in play, but the coming months could become very interesting, and very worrying, for the housing market.
