Grant Shapps, the housing minister, has warned this week that new rules on mortgage lending could shut thousands of buyers out of the property market and deepen falls in house prices. He said reforms being put forward by City watchdog, the Financial Services Authority (FSA), must not be so severe that they make an already difficult situation worse for potential buyers.
The proposed new FSA rules include tough affordability checks and rules on income verification, and making sure people with interest-only mortgages had a way of repaying their loan at the end of its term. According to the Council of Mortgage Lenders, 45% of people taking out a mortgage last year would have been hit by the new measures. According to Mr Shapps, he wouldn't have been able to get his current mortgage under the proposed rules, even though he's on a government minister's salary.
After the financial crisis, banks and building societies tightened their lending criteria significantly, with borrowers now needing deposits of 40% to qualify for the best rates. But this has excluded many people from the mortgage market and led to delays in first-time buyers getting on to the property ladder. Mr Shapps blamed the fall in the number of new homes built in the UK during the past year on the mortgage drought.
So while the new rules being put forward to regulate mortgage lenders could prevent consumers pushing themselves into further debt, they also have a further dampening effect on the already sorry housing and mortgage market. But, given the current lending climate, if you are applying for a mortgage, it pays to make sure there are no hitches in the process.
One simple way is by checking your credit report before you apply, with www.creditscorematters.co.uk this way you can be sure that there are no outstanding credit payments, credit applications falsely made in your name, nor any history of missed payments. The lender will be checking all of these things, so County Court Judgments or any of the other factors above may well affect their final decision.
What's more, each application made leaves what's known as a ‘footprint’
Credit Score Matters is a membership programme which provides access to a Callcredit credit report and credit score. These credit tools are provided by the credit reference agency Callcredit, and may provide an insight into anyone's financial positioning in the eyes of lenders.
Membership with Credit Score Matters provides unlimited access to ones Callcredit report and score, so anyone can monitor their financial position. Once details are successfully verified, people can view their Callcredit credit report as often as they like.
To learn more about your credit report please visit www.creditscorematters.co.uk or call us on 0845 872 5624