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| Version 1 | Version 2 |
|---|---|
| Lifestyle quiz to secure a mortgage | Lifestyle quiz to secure a mortgage |
| (about 4 hours later) | |
| Mortgage applicants face tougher questions about their lifestyle, under new rules that take effect on Saturday. | Mortgage applicants face tougher questions about their lifestyle, under new rules that take effect on Saturday. |
| The changes are designed to "hardwire common sense" into the mortgage application process, the Financial Conduct Authority (FCA) said. | The changes are designed to "hardwire common sense" into the mortgage application process, the Financial Conduct Authority (FCA) said. |
| Questions from lenders about customers' regular outgoings - including childcare costs and even haircuts - could be included in affordability checks. | Questions from lenders about customers' regular outgoings - including childcare costs and even haircuts - could be included in affordability checks. |
| Brokers say the changes could lead to delays and rejections of applications. | Brokers say the changes could lead to delays and rejections of applications. |
| The Council of Mortgage Lenders (CML) said the transition to the new rules would be smooth, despite it being the biggest change to the mortgage market for more than a decade. | The Council of Mortgage Lenders (CML) said the transition to the new rules would be smooth, despite it being the biggest change to the mortgage market for more than a decade. |
| And many lenders have already changed their systems so they comply with the new rules. | And many lenders have already changed their systems so they comply with the new rules. |
| Questions | Questions |
| The rules - known as the Mortgage Market Review (MMR) - are designed to protect consumers from the kind of reckless mortgage lending that would leave them unable to make repayments. | The rules - known as the Mortgage Market Review (MMR) - are designed to protect consumers from the kind of reckless mortgage lending that would leave them unable to make repayments. |
| They were drawn up during the financial crisis and originally planned to come into force last summer but changes were made following consultation with lenders. | They were drawn up during the financial crisis and originally planned to come into force last summer but changes were made following consultation with lenders. |
| At their heart is a new affordability check, that will see applicants interviewed by a lender and asked about their income and outgoings. | At their heart is a new affordability check, that will see applicants interviewed by a lender and asked about their income and outgoings. |
| Martin Wheatley, the chief executive of the FCA, told the BBC: "The core principle is a very sensible one - lend to people what they can afford to repay. | |
| "We've come out of a period, particularly in 2008-09, when there was no attempt to verify people's ability to pay, and we've ended up with lots of payment problems, lots of people in mortgages that are problematic for them, and if we had a different interest rate environment we'd see a lot of foreclosures." | |
| Previously, many mortgage offers were based on a multiple of the buyer or homeowner's income. Now, more consideration will be given to the household budget and how much spare money is available to them. | Previously, many mortgage offers were based on a multiple of the buyer or homeowner's income. Now, more consideration will be given to the household budget and how much spare money is available to them. |
| That is likely to mean more detailed checks, with questions asked about anything from subscriptions to childcare costs. | That is likely to mean more detailed checks, with questions asked about anything from subscriptions to childcare costs. |
| Applicants will be expected to explain if they are predicting any significant change in their income or spending. | Applicants will be expected to explain if they are predicting any significant change in their income or spending. |
| Lenders will also have to "stress test" an applicant's ability to repay if interest rates increased over a five-year period. This is expected to lead to some applications being rejected. | Lenders will also have to "stress test" an applicant's ability to repay if interest rates increased over a five-year period. This is expected to lead to some applications being rejected. |
| However, the Building Societies Association (BSA) said this did not mean that those on lower incomes or those only able to offer a small deposit would be frozen out of the property market. | However, the Building Societies Association (BSA) said this did not mean that those on lower incomes or those only able to offer a small deposit would be frozen out of the property market. |
| Paul Broadhead, head of mortgage policy at the BSA, said: "It is understandable that people are concerned about the changes to the mortgage application process, however it is vital that this new regime does not dent consumer confidence or sentiment in the housing market. | Paul Broadhead, head of mortgage policy at the BSA, said: "It is understandable that people are concerned about the changes to the mortgage application process, however it is vital that this new regime does not dent consumer confidence or sentiment in the housing market. |
| "It is highly unlikely that a single purchase or category of expenditure will make the difference between yes or no decisions." | "It is highly unlikely that a single purchase or category of expenditure will make the difference between yes or no decisions." |
| Mortgage lenders have had to train staff in the new rules, but the extra pressure on time could mean the process of securing a mortgage to buy a home could take longer. | Mortgage lenders have had to train staff in the new rules, but the extra pressure on time could mean the process of securing a mortgage to buy a home could take longer. |
| Ray Boulger, from John Charcol mortgage advisers, told the BBC that while some of the checks were common sense, he thought some were unnecessary. | |
| "When it gets down to asking for detail on non-essential expenditure, which we know in practice that people tend to cut back on if they need to, that's where I think some lenders are going too far - but it does vary considerably from lender to lender." | |
| Are you in the process of taking out a mortgage? Are you concerned about the tougher questions? You can email your experiences to haveyoursay@bbc.co.uk, using the subject line 'Mortgage questions'. |