Partly Cloudy

Partly Cloudy

max temp: 18°C

min temp: 12°C

ESTD 1874 Search

WIN A NEW HYUNDAI i10 - See the EADT on June 8 for full details

East Anglia: Ipswich Building Society promises flexible response to Mortgage Market Review reforms

10:13 25 April 2014

Ipswich Building Society chief executive  Paul Winter

Ipswich Building Society chief executive Paul Winter

Archant

Ipswich Building Society has pledged to try to help “mortgage misfits” who may be left struggling to obtain a home loan as a result of new affordability tests.

shares

From tomorrow, industry-wide changes knowns as the Mortgage Market Review (MMR) will require lenders to take a closer interest in the spending habits and life plans of mortgage applicants.

The changes follow a review led by the Financial Conduct Authority (FCA) and are designed to prevent a repetition of irresponsible lending practices seen in the years leading up to the financial crisis in 2008.

However, there are concerns that the new measures, intended to ensure that mortgage applicants will be able to keep up their repayments, could result in some credit-worthy people being turned down as a result of inflexible computer-generated decisions based on their responses to questions about their spending.

The Ipswich Building Society says that potential “misfit” applications include those earning less than £25,000 per year, small business owners, the self-employed and those who have non-standard income sources such as pensions, equity in a business or property, rental income and investments.

However, the society says it will retain its existing methods of verifying income and will use an applicant’s own evidence of spending rather than relying on a computer model to determine what “typical” spending looks like.

Paul Winter, chief executive of the Ipswich Building Society, said: “It is entirely appropriate that the FCA wishes to introduce regulation to ensure the lending excesses of pre-2008 are not repeated and that irresponsible lending is firmly tackled.

“However, I am concerned that people on average incomes may now find it harder to obtain a mortgage and I believe this may prove to be an unintended consequence of the methods used to implement affordability requirements.

“Ipswich Building Society has always manually underwritten and carefully reviewed the financial situation of our mortgage applicants. This is confirmed by our lower than industry average arrears levels.

“Previously acceptable borrowers may now struggle to pass the new affordability test if relying completely on computer data to prove expenditure.

“Whilst we cannot change the new affordability model, we will offer borrowers the option to provide their own expenditure evidence rather than relying on a computer model. We hope this will help more people to obtain a home of their own.”

The society says that, in light of the reforms, anyone seekinig to take out a mortgage will now need to consider lifestyle changes well ahead of their application, not only saving for a deposit but checking their levels of credit, reducing any debts and reducing general spending habits.

However, Mr Winter said that Ministers also needed to take action. “The Government needs to address housing supply issues rather than potentially limiting those on average incomes from obtaining a mortgage,” he added. “Many aspirational home owners are facing a double lock: unavailable lending and a lack of homes to choose from.”

shares

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

Retail sales are

Retail sales are “bounding ahead” as falling prices and a boost to consumer spending power is giving retailers the most upbeat outlook for 27 years, according to new figures.

A Ryanair passenger plane after take off from Stansted Airport.

Budget airline Ryanair saw profits growth take off last year as a revamp designed to improve its image and attract business customers sent earnings soaring by 66%.

The New Anglia Growth Hub team, including its business growth advisers who offer free support to businesses in Suffolk and Norfolk.

New Anglia Growth Hub has beaten its target of providing support for 3,000 businesses in its first year.

Andrew Rowe, managing director of Concertus.

Andrew Rowe, managing director at Ipswich based Concertus Design & Property Consultants, has been appointed as finance director for SPACES, the new society that has been formed from a merger between SCALA (Society for Construction and Architecture in Local Authorities) and SCEME (Society of Electrical and Mechanical Engineers serving Local Government).

Greene King apprentice Tamara-Leigh Kirkham.

Greene King has been named VQ Large Employer of the Year for 2015, in recognition of its support for members of its workforce undertaking vocational qualifications (VQs).

Sizewell A and B

Staff at the redundant Sizewell A nuclear power station will have to wait to find out if their jobs are safe from planned redundancies.

The opening of Precision Marketing's new headquarters in Bury St Edmunds.

An expanding marketing services firm celebrated the official opening of its new head office in Bury St Edmunds yesterday.

Abby Curtis who is opening Pump and Grind coffee shop in Great Colman Street with Tom Kerridge

The business team behind a new cafe have said they are disappointed they will not able to serve alcohol when opening for the first time on Saturday.

Arlingtons new art exhibition, Liz and Ken Ambler at the launch

Music, art, wine and a great deal more

Steven and Debbie Morgan pictured when they took over The Royal Oak earlier this year

Firefighters were called to a pub last night following a water leak which caused flooding.

Most read

Most commented

Topic pages