In 2007 the mortgage lending boom reached a pinnacle of £362 billion of which a large portion was high risk borrowing with 100% and over on loan to value mortgages.  The fact that lenders were offering no deposit mortgages helped many climb onto the property ladder but it also put people onto mortgages that they could not afford.  There were still others that were able to gain approvals with self-certification that overestimated their ability to afford a mortgage repayment plan.  Eventually the global financial markets crashed and others, even those not in the high risk mortgage deals suffered financial problems.

In an effort to push responsible lending and borrowing, the Mortgage Market Review (MMR) was issued.  Changes put into place by the MMR will impact many borrowers but the changes are meant to save those that cannot afford it from eventually defaulting on a mortgage loan.

One of the main changes put into place by the Financial Conduct Authority is the mandatory advice required for borrowers from qualified mortgage advisors.  Borrowers will also be required to give evidence of their income to demonstrate affordability of the mortgage and terms offered by the lender.  A stress test of the affordability of the mortgage by the borrower will be completed to determine if mortgage is affordable not only in the beginning but in the future should interest rates change and their income circumstances change.

Many lenders have already been operating under the new guidelines having incorporated the MMR guidelines earlier than the April deadline so many mortgage and remortgage borrowers will have already met with the regulations.