Borrowers with dependents and low incomes have been hit hardest by the Mortgage Market Review (MMR).
Some 85% of lenders identified low income borrowers as seeing the biggest impact on what they can borrow under MMR, while 77% named borrowers with dependents.
The new research, published today by the Intermediary Mortgage Lenders Association (IMLA), showed that 38% of lenders said self-employed and single borrowers were also heavily affected by the MMR.
Brokers, by contrast, felt borrowers with dependents have been the most affected (72%), followed by low income borrowers (60%) and the self-employed (47%).
The majority of brokers also reported declines and falling loans as a result of stress tests
But opinion was split about the scale of MMR's impact on consumers. While 63% of brokers believed significantly more borrowers are being turned down as a result of interest rate stress tests, just 15% of lenders agreed.
The difference is likely to reflect the fact that while lenders are reporting on trends within their individual businesses, brokers working with multiple lenders have a view across the wider market, IMLA said.
Brokers may also be advising some borrowers against submitting an application to lenders, based on a discussion about their finances and needs.
Brokers and lenders agreed that stress tests have had more of a direct impact on the amount consumers can borrow, compared with other changes to the MMR approval process.
Some 79% of brokers believe interest rate stress tests have reduced the amount that can be borrowed, as do 55% of lenders.
More detailed income/expenditure assessments and evidencing requirements have also had a direct impact on what people can borrow.
Despite these concerns, 71% of lenders and 58% of brokers believe MMR will have a positive effect on consumers by improving the quality of advice they receive.
However, there are concerns over the implications on products, with 71% of brokers believing MMR will have a negative impact on sourcing mortgages.
Peter Williams, executive director for IMLA, said: "For many lenders, the MMR switchover has been more of a gradual shift than an overnight change.
"Even so, these are still early days and the real test will come beyond the six-month milestone when we see if these effects have eased off or endured.
"The fact that interest rate stress tests are having the biggest impact on borrowers shows they are doing their job by identifying those who would struggle to manage their repayments if rates rise.
"It may involve some short-term pain for those who can only borrow less than they were hoping, but it is a necessary move to protect their long-term financial position when the inevitable rise occurs.
"Brokers are an integral part of the new regime and their advice is becoming increasingly valuable to match consumers to a suitable lender and product.
"Nonetheless, the available options have clearly diminished for some borrowers more than others."
Comments