Some newspapers do a great line in how the world has gone mad. Recently it was the mortgage lenders who were in the scary headlines with “borrowers face interrogations”.
The reality is a little different.
The trigger for this was the introduction of the Mortgage Market Review (MMR) on April 26.
This new regulatory requirement is, in fact, a common-sense response to the madness of self-certified and unaffordable loans that played their part in the financial meltdown of 2007/8.
“Self-certified” is a polite phrase – in some quarters these mortgages are known as “liar loans”.
Originally created to deal with self-employed applicants without payslips, these mortgages moved into the mainstream on arguments of speed and convenience for employed applicants too.
The temptation to overstate incomes was too much for many as they expected booming house prices to make quick gains.
Alas, the music stopped.
MMR has two main strands.
Firstly, lenders must establish that the borrower can afford the mortgage now and if pay rates rise.
This means completing a realistic budget planner and evidencing all the income. Stories about having to set down how much you spend on pocket money are, however, apocryphal.
Secondly, with a few exceptions, mortgages must be sold on an advised basis except where processes are remote or non-interactive.
This, it is hoped, will improve the quality of outcomes for applicants.
There are over 300 pages in the MMR, but that’s basically it.
It’s hard to see what the problem is, as sensible lenders already operated in this way.
Perhaps some institutions will ask too many questions but this is unlikely to be the start of mortgage starvation.
For us it’s no real change, we are here to lend, and our customers expect us to check they are able and willing to repay.
Mr Robinson is the chief executive of Market Harborough Building Society.
For more information about the firm, see its website at www.mhbs.co.uk.