Mortgage customers are aware of 'personal affordability limits'
Consumers are increasingly doing own research before consulting a mortgage firm
This is according to new research released today by mortgage regulator the Mortgage Code Compliance Board (MCCB).
Consumers are satisfied with the mortgage purchase process
The results - from a survey of over 200 new mortgage borrowers - complement the mystery shopping research results published by MCCB in July. The survey covered the way 'affordability' issues are being addressed by mortgage firms in the whole mortgage sales process.
This research is the last to be commissioned by MCCB to gauge consumer opinion ahead of the Financial Services Authority (FSA) taking over regulation of the mortgage market on 31 October 2004. The study was conducted by leading market research specialists NOP World amongst a sample of first-time buyers (FTBs), movers (those taking out a mortgage to move house) and those re-mortgaging their property without moving (re-mortgagors).
Key results from the research include:
73% of respondents stated that their main concern when arranging the mortgage was the affordability of the repayments.
86% of the sample had an idea ['good' or 'rough'] of the amount they wished to borrow before arranging their mortgage.
There is no evidence that during the sales process respondents were being influenced to increase their expected mortgage borrowings: only 13% of the sample indicating that they had borrowed more than they originally had in mind; 61 % - the same; and 11% less.
Most respondents had done some of their own research before starting to arrange a mortgage with 67% using the Internet to search for information and 64% using provider's booklets to assist them in this.
23% of FTBs were seeking a maximum loan compared with 16% of movers and 7% of remortgagors.
The fact-find process in relation to affordability indicated a fair degree of depth in the coverage, including information for customers in relation to potentially increasing interest rates and 'payment shock' at the end of special fixed or discounted deals.
Most respondents who were quoted an income multiple as a guide to the maximum mortgage sum they could borrow were quoted a figure based on 3x income with a provision for a second income if applicable. 14% were offered 4x income and only 3% a figure based on 5x income or more.
98% of respondents were clear about what their mortgage payments would be.
95% of customers were comfortable that the arranger was not pressing them into a larger loan than they were comfortable with.
Overall 97% of the respondents were very or fairly comfortable with the level of mortgage they were taking on. Encouragingly this high level of comfort is matched when respondents were asked how they felt about the amount borrowed now that they had been making repayments for a period. Overall 93% of respondents were satisfied (68% very satisfied) with how their mortgage had been dealt with.
ยท
Luke March, Chief Executive, MCCB said:
"MCCB is pleased that the research shows that consumers are taking the costs involved in taking out a mortgage very seriously. The research reveals that the Internet in particular is being used by homebuyers to access information prior to getting a mortgage, which means that consumers are able to make better-informed decisions when they come to arranging their mortgage through a lender or intermediary.
Overall there is little evidence to suggest that repayments are more difficult to deal with than consumers expected when arranging a mortgage, which reflects overall sensible levels of borrowing and generally the provision of good quality advice and information from mortgage firms."
