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Mortgage accessibility in the UK hits three-year high

Mortgage accessibility in the UK has improved to its highest level since tougher lending conditions came into play as part of the introduction of the Mortgage Market Review (MMR) in April 2014, according to new research from the Intermediary Mortgage Lenders Association (IMLA).

Almost a third (30%) of brokers said that they encountered no problems sourcing a mortgage for any type of client in the second half of last year, up from 26% in the H1 2016, and double the 15% recorded in the first half of 2015, suggesting that lending conditions are improving.

Brokers also reported an improvement in their ability to source mortgages for a variety of different groups of borrowers, including first-time buyers.

There was a major improvement in lending to self-employed individuals, including investors, as well as those that have irregular incomes, with the rate of brokers who were unable to secure a mortgage for borrowers that fall into this category dropping from 50% in the first half of 2016 to 25% in the second half, while the rate for those unable to source mortgages for interest-only borrowers fell from 52% to 31%.

There was also a sharp decline in the rate of brokers who were unable to source a mortgage for borrowers looking for mortgages lasting into retirement, which dropped from 43% in the first half of the year to 29%.

Peter Williams, IMLA’s executive director, said: “It is hugely encouraging to see a greater number of brokers are reporting that they are successfully arranging mortgages for a wide variety of clients. Over the past few years, regulations like the Mortgage Market Review (MMR) have raised the bar in terms of borrowers’ requirements, which some predicted would leave many borrowers locked out of the market. This new regulatory regime has made the intermediary channel more important than ever, and brokers are clearly doing a great job of helping people get a foot on the housing ladder.

“House prices have been growing faster than incomes over the past few years, which has challenged affordability. This issue has been particularly acute among first-time buyers, which means the fact that just 16% of brokers reported they were unable to source a mortgage for someone in this group over the six months is very positive news. Low mortgage rates have continued to support borrowers’ affordability by reducing monthly payments.”

Both lenders and brokers alike viewed the remortgage market as having the best prospects for growth in 2017, according to the study.

In terms of developments in mortgage availability for the remainder of 2017, lenders viewed borrowing-into-retirement as the segment of the market with the biggest prospects for growth, with a total of 83% of lenders anticipating that there would be greater availability of mortgage finance to such individuals.  The area of the market chosen by brokers to have the greatest increase of availability over 2017 was lending to landlords using a limited company vehicle, with 65% envisaging growth potential.

Williams added: “The low rate environment is ideal for existing homeowners looking to switch onto a better mortgage deal, and it is no surprise that both lenders and brokers foresee significant increases in this part of the market. While mortgage rates look as though they might have bottomed out, any increases are likely to be minor and will still be conducive to remortgaging activity.

“It is also positive to see that lenders predict greater availability for customers looking to borrow into retirement. This part of the market has been underserved in recent years, and it is vital that this growing demographic has access to the mortgage market.”

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