Tight mortgage rules squeeze the old and the self-employed

Tim Wallace
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MORTGAGE brokers are increasingly struggling to find loans for home buyers with unusual requirements, thanks to tougher rules on lending quality, the Intermediary Mortgage Lenders Association (IMLA) warned today.

Three-quarters of brokers said lenders are “too conservative” on mortgage criteria.

The survey found 84 per cent of brokers have been unable to help a customer in the last six months as a result – up from 78 per cent who had found problems in the previous study in July 2014.

Those borrowing into retirement are struggling to find products, as are the self-employed and housebuyers on lower incomes.

Brokers have access to a wider range of mortgages than a potential buyer searching the high street or internet alone, and so the problems impacting on brokers indicates a widespread issue.

Tougher assessments on customers’ income and expenditure is having an impact according to 71 per cent of brokers.

Extra evidencing requirements are hitting lending according to 56 per cent of brokers, while 81 per cent said interest rate stress tests on individuals is also having an impact.

“Regulation is vital to ensure that mortgage lending is safe and in proportion to consumer needs and the wider economy. But when families with dependents are among those who find themselves at a disadvantage, there are legitimate concerns that the pendulum has swung too far as a result of successive, incremental measures,” said Peter Williams from the IMLA.

“What’s clear is that each new layer of control squeezes more people out at the margins. As the boundaries grow tighter, we must work to avoid unintended social engineering as a result.”

More broadly, the study found 51 per cent of brokers believe overall mortgage market conditions are improving, compared with 23 per cent who say they are getting worse.

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