Some 45% of people who planned to buy a property since the introduction of the UK Government’s new affordability rules last year have failed to do so, new research has found.
And many feel less in control of securing a mortgage as the new Mortgage Market Review (MMR) introduced a year ago has created confusion, according to the research from Experian.
A quarter claim that the MMR has impacted their ability to buy a property, while 37% report that the changes have made them feel less in control of securing a mortgage.
The research also suggests that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. For example, 46% have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money.
‘Preparation is the key to successfully navigating the mortgage market post-MMR. Understanding the affordability rules and how a lender makes their decision is the key to success,’ said James Jones, head of consumer affairs at Experian.
‘But it can take time to build a positive credit history and a solid track record of positive money management, so it’s important you start preparing as soon as you make the decision to buy,’ he added.
The research also found that 62% were not aware that lenders may require bigger deposits, 23% believed they could apply for mortgages with smaller deposits than before while 37% didn’t recognise that lenders would now be more careful on whether they could afford repayments and 15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR.
Some 13% do not know how much money they have left over at the end of the month, 18% don’t even know what monthly repayments they can afford, 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed.
Experian said it was concerned that 11% of those who were unsuccessful did not know why or haven’t asked their lender, leaving them at a significant disadvantage when it comes to improving their chances of being accepted in the future.
Guy Shone, from Explain the Market, said that it seems many people remain stuck in a bit of a muddle.’ More needs to be done in 2016 to encourage personal financial planning and properly support aspiring home buyers, so that all buyers fully understand the rules of the game and stand the best chance of securing a property they can afford,’ he explained.