New MMR rules could force lenders out of the adverse mortgage sector
With the introduction of the Mortgage Market Review (MMR) in April, rules which oblige lenders to make stricter affordability checks are likely to tighten criteria which could narrow the market, according to some adverse credit lenders.
According to Kensington, this may even cause some lenders to leave the sector altogether.
Roy Armitage, head of risk at Kensington said: “There may be occasion where the extra depth of information required by lenders – especially in relation to the quality of life and essential cost expenditure – may impact the size of loan an applicant may be able to borrow.
He added: “However, some lenders may, after reflection on the new rules and the operational implications, decide that credit impaired lending for debt consolidation is no longer within its risk appetite, assuming that it is already. Of course this depends on how lenders interpret reasonable steps.”