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Should we reform the mortgage market?

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Article Overview

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7.8 million homes have been purchased using a mortgage since the new regulations of the Mortgage Market Review (MMR) came into force 10 years ago. In total, there are currently 8.8 million outstanding mortgages, which equates to just under 30% of all households. As two thirds of all sales are reliant on mortgage finance, the ability to access this credit is crucial to enable individuals to buy homes. Its availability, or lack of, directly feeds through to the demand for housing and ultimately will impact the number of homes that are built.

Following the Global Financial Crisis (GFC), the MMR led to more stringent lending criteria being introduced. These were:

Loan to Income (LTI) flow limit, which meant no more than 15% of a lender’s new mortgages could be at or above 4.5 times the applicant’s income
Stress testing, which meant applicants had to prove they could afford mortgage payments in the scenario that the Standard Variable Rate (SVR) increased by 300bp

Stress testing was removed in August 2022, with regulators assessing that the LTI flow provided enough resilience.

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Jen Siebrits

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Scott Cabot

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Michael McGill

Associate Director

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Should we reform the mortgage market?

Article Overview

Looking for the full Report?

Contacts

Jen Siebrits

Scott Cabot

Michael McGill

Contact Your Local Office