4 in 10 home buyers think they would struggle to obtain evidence of all expenditure when applying for a mortgage
New Equifax and What Mortgage research reveals consumer uncertainty about home loan application process one year on from introduction of new affordability rules
New research from credit information provider, Equifax, conducted in collaboration with What Mortgage reveals that 4 in 10 (39%) of those surveyed thought they would not find it easy to provide all supporting evidence of expenditure information needed when applying for a mortgage. However, of those who had already applied for a mortgage, less than half of this number (17%) actually found it difficult to provide all the information required.
The release of the research coincides with the anniversary of the new affordability rules which came into effect last April and demonstrates the contrast in consumer perceptions about the mortgage application process and the reality of the property purchase process since the new rules came into effect. “It seems that the affordability rules, introduced as a result of the Mortgage Market Review, are having less of an impact on the application process than was originally anticipated – and than homebuyers might expect”, explained Lisa Hardstaff, Equifax, Credit Information Expert.
As well as fears about information-gathering being unfounded, the Equifax and What Mortgage research has also identified that only 40% of home buyers found the process slower as a result of the new rules than they expected. Only just over 1 in 10 actually found they had over-estimated what they could borrow.
Key findings of perceptions before making an application vs. reality include:
|39% of those in the process of or considering taking out a mortgage thought that it would not be easy to gather all the information needed||81% of those who have applied for a mortgage in the last year found it easy to gather all the information needed|
|59% of those in the process of thinking about applying for a mortgage thought the new rules would slow down the process||Only 40% of those who applied for a mortgage found it did slow down the process|
|69% were concerned about whether they would be able to borrow the amount they needed||Only 12% had overestimated how much they could borrow|
“The results of the new research identify some common misperceptions around the mortgage application process” added Jo Atkin, Editor of What Mortgage. “From the level of financial information required by lenders; the amount that can be borrowed to the length of time the mortgage application process can take. This should give lenders and intermediaries a useful barometer to understand where there are gaps in understanding and how homebuyers planning to apply for a mortgage can be supported.”
Additional key findings:
- Over a half of homeowners in the process of a mortgage application were either not aware of the new rules or how this would impact them (60%)
- Only 12% of mortgage applicants expected to be asked about their retirement plans when applying for a mortgage
- Women (74%) were more concerned than men (66%) about the amount they could borrow
- 19% of men compared to 16% of women were not concerned about the new affordability rules and their mortgage application
- More men (41%) were concerned about the time it would take to complete the process than women (38%)
The findings also reveal that almost half (48%) of prospective mortgage applicants believe that the new mortgage affordability rules will help prevent homeowners from over-stretching themselves.
“Our research provides a useful insight into perceptions of potential home buyers and their understanding of the mortgage application process” added Lisa Hardstaff. “The key thing for those considering applying for a mortgage is to be ‘mortgage ready’ and prepared to show evidence of all income, expenditure and to be realistic about what is affordable.
“A lender will typically look at an applicant’s credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, requesting a copy of their credit file ahead of starting the application process is a useful step for prospective homebuyers.”
For further press information, please contact: Clare Watson, Cecile Stearn, Parm Heer or Wendy Harrison at HSL on 020 8977 9132 / Fax: 020 8977 5200 or email: firstname.lastname@example.org
Equifax is a global leader in consumer, commercial and workforce information solutions that provide businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide. The company’s significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enable it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 19 countries and is a member of Standard & Poor's (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2013, Equifax was named a Bloomberg BusinessWeek Top 50 company, was #3 in Fortune's Most Admired list in its category, and was named to InfoWeek 500 as well as the FinTech 100. For more information, please visit www.equifax.com.