MMR - a note of caution - affordable housing for whom?

With the changes required by the Mortgage Market Review (MMR) now in force, borrowers should expect a longer mortgage application process and a more intrusive interview.

Since 26th April, lenders have been fully responsible for assessing whether the customer can afford the loan and they have to verify the borrower's income. That may seem fair enough - if you don't want to reveal just how much you spend on clubbing, pubbing or cappuccino in a month then tough, because you are borrowing someone else's money.

And don't even think of blaming the regulator for the longer wait for your mortgage approval because regulators generally act after the fact(s), in this case the loose and irresponsible lending that led to the credit crisis.

But this is the UK remember, where we forever enjoy a bit of self-flagellation and where the response to a child playing with box matches could yet result on a ban on the naked flame.

We are warned of overheating in the property market but affordability remains fragile and more regulation will inevitably exacerbate this problem while driving up lender and intermediary costs. Some lenders are likely to quit the market as a result of MMR, dampening competition and driving even more people into the UK's far from satisfactory private rental market.

Then there are the large numbers of homeowners who won't be able to get a new mortgage when they need to relocate. Putting aside the interest only brigade, homeowners who have kept up to date with repayments on, say, a £100,000 mortgage may find they no longer qualify for the equivalent loan.

Under "transitional provisions" the MMR allows lenders to provide a new mortgage or deal to customers with existing loans who may not meet the new requirements. But "the borrowing is not able to exceed the amount of their current loan, unless funding is required for essential repairs". Those repairs need to be essential in terms of maintaining the property value. So what happens if you have run out of space with an expanding family or need to offer a home to an elderly relative?

What's more the lender must now take account of the impact on mortgage payments of future interest rate increases, as predicted by the markets. Well, good luck with that and don't bother ringing Mark Carney as he is probably as confused as the rest of us.

It occurs to me that a fluid UK economy needs a fluid housing market and labour force. It also occurs to me that while the UK is listed as a free-market economy, we appear to be regulated by Marxist / Leninist regulators that are rather costly to run. Overall, the new rules on mortgages may seem like a good idea but the 95 per cent will suffer just to catch the rogue 5 per cent  - as summed up in the Russian proverb "don't use a cannon to shoot a sparrow".

It's true that several horses bolted back in those heady days of irresponsible lending and the stable door has since slammed shut. But we now seem to be going round the rest of the stable hobbling lenders with good track records in the residential mortgage market.

And this new layer of regulation will be felt by middle England - you know those hard working families that once thought that only the poor were poor. According to government spin, they are not only "hard working" but "hard pressed". Too bad because they are now also facing the thumbscrews on borrowing for a home.

I might be wrong, but in coming months we will surely find out. So, I am putting out a plea to write in with any horror stories or add to the debate if you think the MMR is a leap forward. 

When it comes to the horror stories, don't sit on them - they need broadcasting because by my reckoning, we only see change in this country when powers that be start feeling uncomfortable and votes are threatened.