Thursday, March 27 16:24:29
Just under nine out of every ten mortgage applications (89pc) are currently being approved, according to a study undertaken by the Association of Expert Mortgage Advisors (AEMA).
According to Trevor Grant, Chairman of the AEMA, "There are a number of reasons behind the higher approval rates. The mortgages being currently being applied for are more affordable and are based on disposable incomes and loan amounts. This combined with the calibre of mortgage-seekers - particularly first time buyers, in terms of earnings, employment and savings record makes them very attractive to potential lenders."
"We believe that there could be up to 3,000 new applications in the first quarter of 2014, up from 2,068 in Q1, 2013, and the overall number for 2014 should be up 20pc on 2013, from 14,985 to 18,000 approx. In value terms, this would see an increase in cheque issues from E2.5bn to over E3bn for the full year," Mr Grant said.
AEMA say that there are more banks actually lending than at any stage over the past 5 years. If applicants are in secure employment, are able to demonstrate repayment capacity and have a strong credit history, there's now a far better chance that the mortgage application will be approved.
"Ultimately however the key determining factor in this sharp increase in approval rates is that Applicants are increasingly being "coached" by their advisers on good financial habits in order to manage their financial affairs in a more appropriate manner prior to mortgage application stage. This is resulting in higher approval rates on those applications. Applicants now are much better prepared than they were 2-3 years ago with most having readjusted small but critical financial habits to ensure that their 6 month track record is in line with lender policy. On the advice of their advisor they have generally eliminated the "red flags" that Lenders look at when assessing a mortgage application -such as an on-line gambling reference on bank or credit card statements, cash advances on credit cards, referrals or unpaid items on current account statements or not having a clear pattern of paying rent and making savings. This is policy for members of the AEMA when working with their customers," said Mr Grant.
The mortgage experts contend that mortgages and their arrangement have become an extremely complex financial process and as a consequence, the rate of approval varies significantly across mortgage practitioners. While the number of advisors successfully securing mortgage on behalf of their clients was high during the boom years, only a relatively small number of advisors now have the necessary experience and technical knowledge required to ensure that the borrower and their application are suitably prepared to ensure approval. So before engaging with an independent advisor or bank personnel, the applicant should inquire about the relative success of that individual or firm.