Mortgage Market Review proves beneficial for brokers, building societies and specialist lenders

Your home may be repossessed if you do not keep up repayments on your mortgage.

Intermediaries, building societies and specialist lenders have gotten a bigger share of gross mortgage lending at the expense of banks as a result of the Mortgage Market Review (MMR), the IMLA says.

Ongoing demand from ‘niche’ borrowers is providing intermediaries, building societies and specialist lenders with opportunities to grow, partly because the self-employed and other non-standard customers in the post-MMR world fit less well into the automated loan underwriting systems favoured by some larger lenders, according to a new report of the Intermediary Mortgages Lenders Association (IMLA).

The end of non-advised sales has led lenders to source more business from brokers, and between Q1 2014 – immediately before MMR implementation – Q4 2014 the number of consumers using intermediaries rose by 20 per cent while those going direct to lenders fell 6 per cent. Peter Williams, Executive Director for IMLA, commented:

“Twelve months ago we took the view that the mortgage market was leaning heavily on temporary support measures while being subject to permanent regulatory changes. The aim of dampening the credit cycle is laudable, but there is a danger that regulation could have an asymmetric effect on the future – curtailing the upswings while providing little support in the downswings”.

“The introduction of the MMR and first use of the macro-prudential tools cannot be held entirely responsible for the slowdown over the last year, but we may be getting the first taste of how the new regulatory regime can engineer a more subdued market – even with the policy prop of ultra-low interest rates”.