The mortgage inquisition

Mortgage applicants are being asked strange and potentially intrusive questions to help mortgage lenders determine their eligibility for a loan, including whether or not they play golf, eat steak, and even how much they pair for a haircut!

Being dubbed as another ‘Spanish Inquisition’, the initiative to look into an applicant’s finances in much finer detail has been put into place to avoid another spell of “reckless lending” by banks.

Worryingly, some of the questions being asked also delve into more personal matters, such as whether or not the applicants are planning to have more children in the future, and it is these questions that are beginning to rile prospective home owners.

Prospective Parents Could Miss Out

It seems the factors that may have the worst impact on a lender’s eligibility are childcare costs.

Yesterday Ray Boulger of mortgage broker John Charcol was quoted on the matter in the Daily Mail, stating “The most common reason to knock people back is childcare costs. It’s particularly bad if people have more than one child, or they are under school age”. “There are aspects of the rules that make it difficult for lenders to apply common sense”.

The man behind these changes, Chief Executive of the FCA Martin Wheatley, has insisted the rules were “hardwiring common sense” into the mortgage market.

Mr Boulger on the other hand said : “Comments like that demonstrate that he doesn’t know what’s happening on the ground.” He said the stringent application of the rules was, in fact, “hardwiring insanity into the mortgage market” .

Figures collected from John Charcol show that the clampdown is cutting as much as £100,000 off the amount that banks are willing to lend. The broker said the average mortgage signed by clients last week was £300,000 compared with £316,000 in January and similar sums throughout most of 2013.

The rules raise the prospect of gender discrimination, as some banks have been asking how much borrowers spend on haircuts; this could result in women being evaluated differently on the grounds that their haircuts commonly cost a lot more than men’s, and then being refused a mortgage where a man would not be.

A spokesperson from the FCA said “There will be more consistency as these rules are applied and things bed down”.

While things in the mortgage market may be a little shaky for now, you can be sure of a reliable property conveyancing service from Abacus Solicitors. Contact Abacus Solicitors today on 0161 833 0044.