Have MMR mortgage rules already made their impact?

Have MMR mortgage rules already made their impact?

The Mortgage Market Review (MMR) regulations came into effect in the UK at the weekend (April 26th), with the intentions behind them to help mitigate against a return to the sort of reckless lending seen pre-2007, which eventually saw the market crash and price hit rock bottom.

"MMR represents a seismic shift in mortgage regulations, but also the end product of a gradual process since the recession to focus in on affordability and responsible lending," Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), but have the regulations started off with the sort of immediate effect that financial leaders were looking for?

According to Connells Survey & Valuation, they have already made something of an impact, with a drop in the number of people able to get a mortgage immediately cutting the potential buyer numbers across the country and sending prices lower immediately. 

In particular, the company said that in March, even ahead of the rules coming in, there was a small drop in the number of people who were looking to get onto the ladder for the first time in particular, mostly because many will know that they would not be able to pass the stricter conditions.

It's not all bad news, though. John Bagshaw from the Connells said: "When the final figures come in from the Council of Mortgage Lenders, there will probably have been slightly fewer first time buyers in March than might have been expected otherwise. But that doesn’t change the long term trend."

He believes that the average mortgage is still far more affordable than it has been in recent years thanks to the fact there are simply more products around.

And while a drop in the number of viewings and valuations in the immediate aftermath of these rules being introduced may seem like a negative initially, there can be little doubt that in the long run it can only be a positive. 

Fewer mortgages handed out that people cannot afford to pay back means a lower rate of repossessions and a far healthier market that is less likely to crash as it once did.

Time will tell for the MMR regulations, and it's far too early to see any long-term trends that it might spawn, but the outlook is good for the future.