Bridging lender MTF’s latest Broker Sentiment Survey has revealed that delays to mortgage applications have caused brokers the most difficulty following the implementation of the Mortgage Credit Directive (MCD).
39% of the 101 brokers quizzed in the quarterly survey said delays to attaining a mortgage caused the most difficulties since MCD, followed closely by 31% of brokers who blamed complications with new affordability models.
22% said changes in consumer buy-to-let rules had caused their business the most difficulty.
The new MCD rules were implemented by the Financial Conduct Authority (FCA) in March, designed to foster a single market for mortgages and protect consumers.
Meanwhile, 40% of brokers said borrowers looking to remortgage had been most affected by the new MCD rules. The second most affected by MCD were landlords at 21%, followed by low income borrowers at 17% and self-employed borrowers at 16%, data shows.
In the run up to MCD, many brokers feared the new rules would lead to a decline in loan volume however, only 15% of brokers surveyed said they had experienced an actual drop in business since it was introduced. 46% of brokers said they had experienced an increase in volume across the board, while 39% said volume remained the same.
62% of brokers questioned experienced a rise in bridging loan volume in the second quarter of 2016, while 38% said bridging volume remained the same. No one questioned saw a decrease in bridging volume during the quarter.
Development projects were the main reason broker’s clients took out a bridging loan during the second quarter at 42%, followed by mortgage delays at 25% and purchasing an investment property at 16%.
43% of brokers surveyed think the new MCD rules have not improved the market, while 21% said there was an improvement. 36% were undecided.
Tomer Aboody, director of MTF, said: “The results reflect the introduction of stricter affordability and stress testing, which may be leading to delays on mortgage applications. 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.”
“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.”
