With increasing numbers of borrowers turning to the property market once more, the Council of Mortgage Lenders (CML) has reported the highest quarterly lending levels in Scotland since 2008 with home owner lending for house purchase increasing by 23% year on year.
Is it all Good News?
Certainly the economy and indeed the property sector seem to be enjoying a long awaited improvement in performance however, there are some fairly big changes ahead for the mortgage market.
In April of this year the Financial Conduct Authority will introduce new rules which will make Lenders fully responsible for assessing whether the customer can afford the loan, and they will have to verify the customer’s income. They can still choose to use intermediaries in this process, but the Lender will remain responsible.
What does this mean for Borrowers?
Essentially, Lenders will be looking much more closely at the affordability of a mortgage which means a detailed assessment of income and expenditure.
They may even go as far as stress testing borrowing against higher interest rates to ensure as and when interest rates do rise, the loan remains affordable within certain parameters. In essence, it is anticipated that this will not only increase the time the mortgage process takes, it may also make mortgages more difficult to secure.
House are prices expected to rise
All of the evidence is pointing to gradual house price increases in Edinburgh and the Lothians throughout 2014 and into 2015, so buyers and sellers are now at a crucial stage of the decision making process.
Now is the time to make a judgement about the future
If you are considering selling your property to move up the ladder, then you should consider doing so before the prices move in an upward direction. Price increases will only serve to make your new property disproportionally more expensive. When added to the fact that it may be more difficult to obtain a mortgage based on very detailed affordability after the introduction of new rules from 26th April 2014, all evidence is pointing towards the first quarter of 2014 being the ideal time to move.
Why not ask us for a no obligation consultation? It’s designed to help you arrive at an informed decision about whether now is the right time for you.