Two thirds of potential homebuyers have been left in the dark by new mortgage affordability rules, research reveals.
Some 35% of potential buyers are confused by mortgage affordability rules, while another 31% are completely unaware that rules changed last year, according to research by Ocean Finance.
The Mortgage Market Review, which came into force in April last year, put borrowers under increased scrutiny about their incomes and expenditure.
Yet 70% of those questioned were unaware that lenders are required to look closely at their spending.
Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage.
Of those who do know that lenders are required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions.
Just 24% of aspiring homebuyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise.
And barely 16% knew that the rules would also test their ability to withstand changes to their personal circumstances.
To help demystify the new rules, almost a fifth of potential buyers have sought advice from an independent mortgage broker.
Worryingly, a third have not sought any advice on applying for a mortgage.
The research shows that a third of potential homebuyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage.
Gareth Shilton, Ocean’s spokesperson, said: “More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality.
“Even more worrying is that a large chunk of people who are gearing-up to apply for a home loan are not even aware that the mortgage rules have changed.
“As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting.”