In the News: Mortgage Market Review - Is this really a case for panic?

[SnowBells]

Starting to panic.

We are in the midst of buying a house. And now the MMR kicks in, and the media is awash with horror stories. Is anyone here in the same boat???

Problem is, we didn't do the 'scrimp for 3 months' plan. We should have, but always knew we could adjust all spending, etc. when the time comes… until we found THE house. I mean we do save hundreds a month, etc. but we didn't get rid of every single luxury there is!!!!

I'm only on £16k-17k and I'm attempting to get a mortgage

I meant to add something about renting too.

I can empathise with those who's argument is that they are comfortably paying more in rent than a mortgage would be, but are being refused the mortgage, however I believe the answer is not increasing borrowing, it's having stricter regulations around rent.

If there were a body such as the FCA who could ensure that rent payments were reasonable and consistent, then you wouldn't see as many people losing their homes to rent arrears.

The answer isn't getting into hundreds of thousands of pounds worth of debt. I agree that we all have the right to affordable secure housing. However owning said house is a privilege, not a right.

But renting and a loan aren't the same. They can't take a rental and calculate how much to lend individuals as then everyone would want that. The loan is secured on the property and there is loss all round if the mortgage payer defaults. In rentals if you don't pay you are out and the landlord can have a new tenant so loss is different. I do agree at one size fits all is not ideal but what alternative? Definitely agree rent regulation is the answer

Iseenyou my childcare costs may drop in 3 or so years, although my mum does some now, and may not be able to then iyswim.

I do think the possibility of increased interest rates needs to be taken into account, but even then, if I got a 100k mortgage, I worked out I could still make repayments at 12% if I had to.
And as for maintenance, I already spend money on that as my LL won't ever fix anything. Insurance would be a bit more, and I would have to put aside money for emergency repairs etc, but I am so used to living on nowt; I already spend very little outside of utilities/food/travel as I was very poor until recently, and now saving any extra I have.

I do think there is a difference between someone like me, who has been a lone parent for nearly 8 years , been on income support, had to learn to make do and mend for years and is now really good at it, and a young couple who are used to going out a lot, having takeaways, going on holidays, and them having to suddenly tighten their belts when they get a mortgage.
A colleague at work, who is 25, recently bought a house with her partner, and she is always complaining that they can't afford to do anything, but I don't do anything already! I'm really good at austerity!

I wonder if you will be able to update your affordability rating when you get a wage rise or children no longer need expensive care. That could be an admin nightmare and is a flaw in this system.

Well yes, and you'd be assessed at that point on your income and outgoings as they are then anyway.

No but imagine someone gets a five year fix and 2 years in gets a promotion that is significant or receives an inheritance and pays off all other credit. It's a potential mine field

I don't understand why it would matter once they already have the mortgage?

The inheritance scenario has happened to us, it makes no difference to our present mortgage though.

But an inheritance would be a one off and not an additional income stream so a lender would not take this into consideration.

The only reason affordability would be reassessed during the lifetime of a mortgage would be if there was additional borrowing or if there had been a default

In Yorks ISeen so not too bad. I can't even think about a mortgage for a while anyway, so who knows what will happen in the next few years.
Just have a sense of doooom!
And, yes, wouldn't move away-good school, family support etc.

you should be able to switch to a new fixed rate with your current lender without having to go through any of the affordability checks again. You just may not be able to switch to another lender.

The only reason affordability would be reassessed during the lifetime of a mortgage would be if there was additional borrowing or if there had been a default

So someone in our situation who is coming up up remortgage next year but has big childcare bills will still be ok to get a new deal, as long as they stay with their current lender?

That's a relief! Not just for us, but for everyone else who might otherwise be stuck on their lender's SVR when they'd prefer the security of a fixed rate.

Don't forget Scotland too Iseenyou, lots of affordable housing there within easy commuting distance of big cities

Yes she only needed a tiny amount and masses if equity and they still quizzed her She got it though but was just surprised to be asked as a few years before she rang up for some equity and it was so different.

Ahh that'll be the difference. You'll always be reassessed if you want to increase the mortgage. But that's always been the case, not just post MMR. (Well, in the 10 years I've worked in mortgages)

Otherwise if you don't need to make any changes then a change in your circumstances, either good or bad is irrelevant.

That's very good to know Eminybob I had no idea!

I'm not sure if this the case for all banks but where I work a risk assessment would still be done, but it would be done in the background. Its usually just a conduct assessment of your current mortgage and would look at things like your payment history, your repayment type.

A rate switch is very straight forward as long as you're not borrowing more. You'll need to go through the new affordability if that's the case

The big lender who is our client isn't allowing any interest only mortgages now or multiple lending. Not sure if that's the case for all of them