The latest Broker Sentiment Survey by bridging lender MTF has found that delays to mortgage applications have caused brokers the most difficulty following the implementation of the Mortgage Credit Directive (MCD).
The quarterly survey, which questioned 101 brokers, found that 39% believed delays to attaining a mortgage caused the most difficulties since MCD, while 31% blamed issues with new affordability models. Meanwhile, a quarter of brokers (22%) blamed changes in consumer buy-to-let rules for causing the most complications for their business.
The Financial Conduct Authority (FCA) introduced the new MCD rules in March in an attempt to create a single market for mortgages and to offer consumers protection.
According to 40% of the brokers surveyed, borrowers looking to remortgage had been hardest hit by the new MCD rules. Some 21% said landlords had been most impacted, while low income borrowers (17%) and self-employed borrowers (16%) were other groups that had been affected, brokers said.
There were fears, before MCD was implemented, that the new rules would lead to a drop off in loan volume. Just 15% of brokers, though, said they had actually experienced a decline in business since March’s implementation. In fact, 46% of brokers said they had witnessed a rise in volume across the board, while 39% said volume had remained the same.
In the second quarter of 2016, 62% of brokers experienced an increase in bridging loan volume, with 38% saying it had remained the same. None of the brokers questioned saw a fall in the number of bridging loans in the last quarter.
The main reasons for a bridging loan being taken out were development projects (42%), mortgage delays (25%) and buying an investment property (16%).
The new MCD rules have not gone down particularly well with brokers, with 43% saying that they haven’t improved the market. Only 21% said they have seen improvement. A further 36% were undecided.
“The results reflect the introduction of stricter affordability and stress testing, which may be leading to delays on mortgage applications,” Tomer Aboody, Director of MTF, said. “Equally, the introduction of the Consumer Buy-to-Let has led to a transitional period, during which brokers and borrowers alike become familiar and comfortable with this new regulatory class.”
He added: “The MCD creates an opportunity and a challenge to both the mainstream and bridging finance markets, which both sectors seem more than well placed to face.”