Tougher questions to secure a mortgage

Frances colour

Under new rules, that take effect on Saturday, mortgage applicants face tougher questions about their lifestyle.

The changes are designed to “hardwire common sense” into the mortgage application process, the Financial Conduct Authority (FCA) said.

Brokers say the changes could lead to delays and rejections of applications.

The Council of Mortgage Lenders (CML) said the transition to the new rules would be smooth, despite it being the biggest change to the mortgage market for more than a decade.

The rules – known as the Mortgage Market Review (MMR) – are designed to protect consumers from the kind of reckless mortgage lending that would leave them unable to make repayments.

Drawn up during the financial crisis, they were originally planned to come into force last summer, but following consultation with lenders changes were made.

The new affordability check will see applicants interviewed by a lender and asked about their income and outgoings.

Martin Wheatley, the chief executive of the FCA, told the BBC: “The core principle is a very sensible one – lend to people what they can afford to repay.

“We’ve come out of a period, particularly in 2008-09, when there was no attempt to verify people’s ability to pay, and we’ve ended up with lots of payment problems, lots of people in mortgages that are problematic for them, and if we had a different interest rate environment we’d see a lot of foreclosures.”