Money Insider: Extra mortgage checks, what's all the fuss?

New mortgage rules came into force last week, and as a result lenders are now required to undertake a more thorough review of an applicants income and expenditure.

While it may make it harder to get a mortgage in some of the more borderline cases where disposable income is tight, for most people it just means the mortgage interview will take a bit longer than it does now as the lender has more questions it needs to ask.

Sadly some people in the press have taken their usual anti-bank stance and blown the whole matter out of proportion.

The Mortgage Market Review (MMR) was designed to ensure that potential borrowers have the capability to afford their monthly home loan repayments now and also when interest rates rise in the future.

It's nothing more than common sense and something that should have been put in place years ago.

Yes, a few more people may be turned down for a mortgage, but if that prevents them going through the major financial stress and heartache of having their home repossessed a couple of years down the line, surely that's a good thing? Well, it doesn't seem that way, according to some of the recent sensationalist media bleating.

How dare those big nasty banks ask us to spend three hours to go through a mortgage application? After all, we're only asking to borrow a couple of hundred thou over 25 years. Whatever next?

And why should we have to give the lender a full picture of our finances – surely we can just scribble a few numbers down on the back of a fag packet? They should be grateful they have the opportunity to lend to us at all.

Seriously though, the claims of this "outrageous behaviour" is coming from the keyboards of the same people who only a few years ago gave the banks a verbal kicking for reckless lending practices when the financial crisis began to unfold.

It's got to be a better way for mortgage lending. If you dig deep enough at the application stage and get a full and accurate picture of a customer's financial position, it should lead to fewer instances of defaults and bad debts.

It's the right thing to do to decline an application if it's clear affordability will be an issue if interest rates increase by as little as one percentage point, particularly as they are historically very low at the moment and that higher borrowing costs are a distinct possibility in the next 18 months or so.

Yes, I agree it may seem a bit intrusive when a prospective lender asks what you spend on childcare, gambling and nights out, but for some people these things can involve a few hundred pounds a month, so they can have a significant bearing on your ability to service a six-figure mortgage. If the MMR had been in place a decade ago, we wouldn't have the current situation where some people are paying only the interest on their mortgage because that's the only way they could manage to get on the housing ladder.

It might have seemed like a good idea at the time, but there are now thousands of people in a sad predicament where the only way they will clear their debt is if they benefit from an inheritance, sell their home or pass away.

I know the banks have lost the trust of many people due to past mis-selling issues, poor customer service, the closure of branches and excessive executive pay, but I think the MMR is a sensible move for both borrower and lender – and that the banks should be cut some slack on this occasion.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

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<b>Kathryn Williams</b>
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<p>
When I was supporting Ray La Montagne I was six months pregnant. He had been touring for a year and he was exhausted and full of the cold. I was feeling motherly, so I would leave presents for him and his band: Tunnock's Tea Cakes, cold remedies and proper tea. Ray seemed painfully shy. He hardly spoke, hardly looked at you in the face. I felt like a dick speaking to him, but said "hi" every day. </p>
<p>
He was being courted by the same record company who had signed me and subsequently let me go, and I wanted him to know that there were people around who didn't want anything from him. At the Shepherds Bush Empire in London, on the last night of the tour, Ray stopped in his set to thank me for doing the support. He said I was a really good songwriter and people should buy my stuff. I was taken aback and felt emotionally overwhelmed. Later that year, just before I had my boy Louis, I was l asleep in bed with Radio 4 on when Louis moved around in my belly and woke me up. Ray was doing a session on the World Service. </p>
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I really believe that Louis recognised the music from the tour, and when I gave birth to him at home I played Ray's record as something that he would recognise to come into the world with. </p>
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