The impact of the European Union’s Mortgage Credit Directive (MCD) is causing worry for nearly three-quarters of the UK’s mortgage brokers who believe that lending activity will be impacted as a result, according to a survey.
The Intermediary Mortgage Lenders’ Association (IMLA) undertook a survey of its members and found that 74% were concerned about the consequences of MCD and 71% of mortgage lenders also expressed a similar view.
The financial services industry has six months starting from 21 September to adopt the new regime under the directive.
Most of the new rules concern establishing better documentation and disclosure for those taking out mortgages.
Mortgage Market Review (MMR) brought in a raft of major changes
That’s in contrast to last year’s Mortgage Market Review (MMR) which brought in a raft of major changes including tightening up a borrower’s affordability criteria and how much advice is given to people applying for a mortgage.
Despite the initial fears of the MMR’s impact, the new rules have been adopted quite smoothly but 40% of mortgage brokers do not believe the same will happen with MCD.
Indeed, many believe that the new regime will create a challenge for the mortgage industry and 11% of brokers believe the introduction will be a ‘significant challenge’.
The executive director of IMLA, Peter Williams, said: “The UK’s mortgage market has undergone a series of adjustments recently and is now facing a collective challenge while being open for business and getting to grips with the new working practices.
“Life is returning to the mortgage market and sentiment is as positive as we have seen since the introduction of MMR.”
Homeowners are considering remortgaging their property
News about the worries of mortgage brokers over the impact of MCD comes at the same time as the Nottingham Building Society has revealed that remortgaging is being planned by one in six homeowners.
The building society says that borrowers are looking to take utilise of the current mortgage price war with low fixed rates available.
From their research, the society believes that the next six months will see a lot of remortgaging activity in the UK as borrowers can enjoy rate cuts on five-year fixed deals of less than 2%.
Bridging loan lender boosts short-term lending deals
Meanwhile, bridging loan lender Shawbrook is to enhance its short-term lending range following a boost in trade after reducing their large loan deals by 0.5%.
Among the highlights for their proposition to clients is an increase in the LTV for residential products of up to 75% and 70% for mixed use and semi-commercial purposes.
Demand from clients and bridging loan brokers
The firm’s sales director, Karen Bennett, said the changes were being made to help meet demand from their clients and bridging loan brokers.
She added: “We look forward to these improvements and how our proposition delivers the best interests of the borrower.”