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worzel

Mmr - Mortgage Market Review

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I've done a little bit of googling, and it is not very clear on what the changes will be. There is talk about the affordability being the responsibility of the lender, but I am yet to see anything specific on what is deemed affordable and acceptable.

Kinda related, but anecdotally, in my area of sussex / surrey borders, I am seeing a very frothy market, with houses that have been on for yonks suddenly going STC (and actually seem to be completing). Its particularly irritating, as the price rises seem to mainly in the more expensive end (500k +) that I am looking at. Our house has pretty much stayed static, which I am not remotely bothered by, its the rises in the houses that I want to buy that I take issue with.

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I've done a little bit of googling, and it is not very clear on what the changes will be. There is talk about the affordability being the responsibility of the lender, but I am yet to see anything specific on what is deemed affordable and acceptable.

Kinda related, but anecdotally, in my area of sussex / surrey borders, I am seeing a very frothy market, with houses that have been on for yonks suddenly going STC (and actually seem to be completing). Its particularly irritating, as the price rises seem to mainly in the more expensive end (500k +) that I am looking at. Our house has pretty much stayed static, which I am not remotely bothered by, its the rises in the houses that I want to buy that I take issue with.

Where did my tiny violin get to?

But on a more serious note, it sounds like people in London are selling up their 2 bedroom flats to move to the nicer areas of Sussex/Surrey?

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Where did my tiny violin get to?

But on a more serious note, it sounds like people in London are selling up their 2 bedroom flats to move to the nicer areas of Sussex/Surrey?

Wasn't looking for sympathy. I tend to agree that it is people from London with "free" money that are bidding up prices. My cash is all hard earned post tax, although I have been fortunate enough to have been in good jobs. When it's all earned income I think you tend to be a bit more cautious about where to deploy it.

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A significant change will be an interest rate stress test. I think affordability at 7% interest rates is the expected stress.

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A significant change will be an interest rate stress test. I think affordability at 7% interest rates is the expected stress.

I would have thought this would cut out a big proportion of the mortgages being written at the moment based on anecdotal evidence from people I know or have heard of taking out mortgages.

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A significant change will be an interest rate stress test. I think affordability at 7% interest rates is the expected stress.

... which would still support a 6xIncome mortgage and leave you better-off than regular mortgage payments from the late '80s bubble.

That is to say, when income multiples crept up to 3x, you'd be paying 14%, fearing a rise, and also paying proportionally more in tax, and for basics like food, clothes and household energy.

Or perhaps not quite: for those with student debt and incomes high enough for repayments to kick in, it may not be lower tax.

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... which would still support a 6xIncome mortgage and leave you better-off than regular mortgage payments from the late '80s bubble.

That is to say, when income multiples crept up to 3x, you'd be paying 14%, fearing a rise, and also paying proportionally more in tax, and for basics like food, clothes and household energy.

Or perhaps not quite: for those with student debt and incomes high enough for repayments to kick in, it may not be lower tax.

Well, that would cover affordability of the interest portion, but what about the capital?

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A significant change will be an interest rate stress test. I think affordability at 7% interest rates is the expected stress.

According to this http://www.mortgages...2007593.article

Residential borrowers will also be subject to a stress test to ensure they can afford their loan if rates rise, with the FCA suggesting that lenders use their SVR plus the five-year forward sterling rate, which is currently 3.5 per cent.

Suggesting sounds like ther are no real rules/hard lines as such

Edited by long time lurking

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We have made a number of changes to our mortgage system to support MMR. Its open to interpretation but alot of the changes are wording or slight changes to our core software (our system has lots of the MMR changes already in place due to some of the customers that have used it in the past)

The biggest change for the mortgage companies is greater compliance, the only real way to achieve this is to rely/buy the right software.

It might slow the heated market a little bit, but it doesn't really change anything much for the man or woman on the street (its not as big as the impact of RDR). Its worth noting that lots of countries around the world are also considering implementing there own versions of MMR.

Edited by AteMoose

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