Only half (51%) of aspiring homeowners are aware of the Mortgage Market Review (MMR) according to new research by TSB. Of those that are aware of the MMR, many still don't understand its impact as nearly a third (31%) have tried to find out more about it.
Interestingly, the 18- to 24-year-olds are the most likely to look for more information about the impact of MMR (75%), perhaps because a lack of understanding of mortgages is common among the next generation of first-time buyers.
Explaining mortgage rules is reassuring to consumers...
However, more than two fifths (41%) of those made aware of the MMR feel it will ensure they can only borrow what they are able to afford, perhaps indicating it is seen as a good thing. Tellingly, after being offered a straightforward explanation of the changes, only a few (3%) felt they still didn't know how the MMR may affect them, which shows how such explanations can go a long way to help consumers.
Applying for a mortgage? Don't panic, do prepare
Encouragingly, many aspiring homeowners are now considering preparing for their mortgage application better by taking a few sensible actions:
- More than half (53%) will save up as much as possible.
- Nearly half (49%) will check their credit report before applying for a mortgage.
- Under half (45%) will take the time to work out what they can afford ahead of their application.
- Almost a third (29%) will look to pay off existing debts.
- Just over a fifth (21%) will make sure they're on the electoral roll.
TSB vows to demystify mortgages
TSB is committed to making mortgages more transparent by offering straightforward explanations to consumers applying for a mortgage, such as:
- Check with your bank or building society how much you can borrow before searching for properties. TSB offers a soft search approval in principle with no impact on credit rating.
- Have realistic expectations about what you are able to repay - work out how much you earn, spend and what you spend it on. TSB's online money planner tool may help.
- Save as much as possible - the bigger your deposit, the lower the cost of your mortgage is likely to be.
- Check your credit report. At TSB, we will tell our customers how to get hold of their credit report, provide contact details for three agencies and tell them what to look out for www.tsb.co.uk/mortgages/guides/mortgage-faqs/#oneone
- Ensure you are on the electoral roll.
- If you've never had any borrowing, take out some form of credit such as an agreed overdraft or a credit card, but ensure you pay it back regularly to build your credit rating.
- Ensure you have a plan in place to repay any existing debt before you borrow any more.
- Improve your understanding of mortgages - check out the free Money Advice Service or speak to a mortgage adviser.
TSB also offers assistance for people whose application has been rejected, helping them understand the reasons behind the decline and assisting them wherever possible.
Ian Ramsden, TSB Mortgages Director, says:"Though the Mortgage Market Review is usually recognised as a positive change by people who understand it, many still have worries as it remains shrouded in mystery. However, there's no need to worry as TSB is here to provide practical advice for those who need it.
"Don't panic, but do prepare for your mortgage application with some straightforward, simple steps: break down your finances, work out how much you can afford and aim to future-proof your mortgage as far as possible by discussing plans with your mortgage adviser."
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Notes to editors
From June 4th-5th 2014, an online survey was conducted among 1,982 randomly selected British adults age 18+ who are also Springboard United Kingdom Community members. The margin of error - which measures sampling variability - is+/- 2.0%, 49 times out of 50. The results have been statistically weighted according to the most current data on age, gender, region, and education from the most recent census data, to ensure the sample is representative of the entire population of GB. Discrepancies in or between totals are due to rounding.