Remortgage and mortgage lending levels are expected by the end of May to reflect the greater detail in which borrowers will be scrutinized as to whether they can truly afford the loan they are seeking.  The new Mortgage Market Review (MMR) which went into effect on 26 April will slow down the process and find borrowers having to share more intimate details about their personal financial life to satisfy stricter lending practices.  They will also have to pass a stress test intended to discover if they can afford the loan when interest rates begin to increase.  The purpose of such detailed analysis by lenders is to ensure that the borrower does not take on mortgage debt they cannot afford and will end putting them in financial distress as well as harm the lender’s ability to collect on the debt.

However, up through March lending was strong as borrowers responded to the growth in consumer confidence, took advantage of cheap remortgage and mortgage deals on the market or sought to escape the stricter lending practices that were due in April.

According to the British Bankers’ Association, gross mortgage lending by banks increased by 38% in March in comparison to the same month last year, as the lending value reached £11 billion.  House purchase approvals rose 43% on the level for last year while remortgages increased by 14%.  In compared to other types of secured lending, remortgages and mortgages saw an increase but other types of lending decreased by 9%.

Demand is expected to remain strong but the MMR will likely cause many hoping for a remortgage or mortgage to be disapproved for lending or it will cause the process to slow for borrowers as they are caught unaware as to the recent changes in lending practices.  For those that have complicated remortgages or mortgage needs the use of a broker could be very helpful.  Interest rate increases are due to start showing up from lenders despite the Bank of England’s Mortgage Policy Committee staying set with the standard base rate of 0.5% according to experts.  Those seeking the low interest rates offered on today’s loans should consider beginning their search for the right remortgage or mortgage deal now.