New Equifax research reveals what current mortgage applicants think about the new affordablity rules
The latest research* from Equifax, the credit information provider, reveals that over half (59%) of people who are either considering, or are in the course of applying for a mortgage believe that the obligation placed upon mortgage lenders to assess their ability to repay will slow down the application process. 32% of those who have yet to apply also said they would find it fairly difficult to obtain evidence of all the expenditure information they believe a lender needs to assess a mortgage application.
As figures suggest house buying is at its busiest during the spring, 69% who responded to the survey also expressed concern that more detailed affordability checks would affect the amount they could borrow. 40% are also worried about the time it will take to complete their mortgage application. The responsibilities placed upon lenders, which came into effect in April 2014, as a result of the Mortgage Market Review, place even greater onus on the lender to assess an applicant's ability to repay. The applicant's credit history is likely to play a crucial role in that assessment, alongside other information gathered as part of the application process.
Laura Barrett, Equifax Consumer Affairs says, “It is important to remember that lenders will take into account the information provided on the application form and will look at an applicant's income and outgoings to ensure they can afford the mortgage they are applying for, now and in the future. However, our research suggests that 22% are still unconvinced that the new affordability rules will help prevent homeowners overstretching themselves in the long term.
“We would recommend compiling any financial documents and expenditure information needed to support a mortgage application, as soon as the application process starts. Advance preparation will hopefully avoid any unnecessary delays.
“A lender will typically look at an applicant's credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, it is suggested that individuals check their credit report before making any applications to ensure that it is in the best possible shape for them.”
The Equifax Credit Report and Score is accessible for 30 days free simply by logging onto www.equifax.co.uk. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £14.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.
*Equifax Mortgage Market Review Survey – conducted March 2015 amongst Equifax Personal Solutions customers – 1540 respondents