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!!!!

Multiple lending is usually having more than one mortgage on the go

The rate isn't based on affordability. The affordability calculations are used to determine how much is lent, not on what terms.

Sorry I should add that that is the approach most lenders make, but there may be some lenders who have risk based rate pricing.

Also, the switching to other lenders issue - that has always been the case, if you move lenders it's based on their assessments, and your circumstances at the time, even if you are just borrowing the same amount. So you would never be guaranteed to be able to switch, and that has not changed due to mmr.

Multiple lending is where you might have say 20% on one product then part in another product.
If you've already got this you might be able to port these if it's the same lender

I think for the lender who's our client the rate is affected mostly by the LTV then the affordability on your score
There is a plausibility check too

The software is only giving the credit reference agencies the info they want.

I obviously can't say too much on how the calculations are worked out within the software

The risk part of the rate comes from the loan to value. The more equity you have in the house, the lower the rate.

I've never heard of affordability effecting the rate. But then I don't know every lenders rules.

Credit scoring plays a part, but is a separate issue entirely, and isn't effected by the mmr changes.

The lenders who have tighter rules around credit scoring and credit referencing tend to have lower rates, so I guess you could say there is a risk based pricing element there, but it would usually be a case of yes or no, not yes but at a higher rate.

And it wouldn't be the case that Mary who has 4 kids and earns £10k gets a higher rate than Bob who has no kids and earns £40k. It would just mean that Mary could borrow less. If Bob's LTV was higher though, his rate would be higher.

God does that make any sense? sorry to go on!

Perfect sense Eminy, good info, thanks

This will also affect mortgages over the next year or 2. The banks are definitely being asked to take stock[[http://news.sky.com/story/1250824/banks-to-be-tested-on-35-percent-house-price-slump s

Yet lenders in general (banks to businesses etc) often charge a higher rate when a company is a worse bet which I think is awful really but common sense. Buy to let landlords pay higher rates than residential customers. Not sure what the reason for that is.

Hi,
We had our mortgage approved in principle with NRAM (part of northern rock) prior to the changes with additional checks we are porting our mortgage to a cheaper property. I stared to pay out for solicitors etc however then the mortgage company informed us that the under writer has not approved the property we wanted to port to even though the surveyor has said it is a mortgageable property. We put an offer in on another property for the same value within days which was accepted. However now the mortgage company are informing us that we have to start the whole entire process again and now wont approve the porting application. So now I have lost all the money spent so far as it was approved as they informed us that they didn't like our first property option a couple of days before the government changes! Any help?

Also forgot to mention they also wont let us rent out our current property and now we are stuck living in an area where we don't want to raise our son 1 1/2 hr away from where we want him to be raised close to our family and friends with better schools which we want him to start soon so we don't have any time left

I understand all of the information about circumstances changing which is what has happened to us as I have reduced my working hours to care for our young son, and I understand if I was to apply to another company then it would be a new application. However you would think that if I am staying with the same company and trying to move to a cheaper property meaning that they are getting cash back by lowering my mortgage and lowering my monthly payments making it more affordable then it would be approved it seems crazy to keep us in this property when they financially gain by us moving.