Findings from a survey by the Intermediary Mortgage Lenders Association (IMLA), showed that 74 per cent of brokers believed the market had become ‘too conservative’ as a result of post-financial regulation.

Following the implementation of the Mortgage Market Review (MMR) in April, 65 per cent of lenders also held this view. IMLA said the most difficult cases to place were clients with adverse credit, interest-only borrowers, customers seeking to borrow into retirement and clients who were self-employed or had an irregular income.

Just over eight in 10 brokers said interest rate stress tests had a direct impact on the amount people could borrow under MMR, compared to those who responded in July. More detailed income/expenditure assessments were also identified as a barrier by 71 per cent of brokers, while 56 per cent said extra evidencing requirements were an issue.

However, alongside recent forecasts that predict a positive year for the mortgage industry, IMLA’s findings indicated brokers and lenders were feeling more optimistic in January 2015.
Just over half (51 per cent) of brokers and 53 per cent of lenders believed mortgage market conditions were improving in January, up from 41% and 44% respectively in July 2014.

A further 23 per cent of brokers said they thought the market was worsening, but this is compared to 45 per cent to the six months previous. Peter Williams, executive director of IMLA (pictured), said: “With the European Mortgage Credit Directive (MCD) on the horizon and the latest Basel Committee proposals, it will become even more of a challenge to understand the individual impacts of these different interventions. What’s clear is that each new layer of control squeezes more people out at the margins. As the boundaries grow tighter, we must work to avoid unintended social engineering as a result.

“Efforts must focus on striking the right balance between innovation and protection to avoid frustrating people’s legitimate ambitions to own their own homes.”