62% of brokers report rise in bridging volumes post-MCD

62% of brokers report rise in bridging volumes post-MCD

Since the implementation of the Mortgage Credit Directive (MCD), 62% of brokers have reported a rise in bridging loan volumes, according to a survey of 101 brokers by MTF.

The bridging lender’s broker sentiment survey found that 42% felt development projects were the main reason for taking out a bridging loan, which was followed by mortgage delays at 25%.

The sentiment survey found that 39% of brokers said attaining a mortgage caused the most difficulties since the introduction of MCD, while 31% of brokers blamed complications with new affordability models. 43% claimed the new rules had not improved the market.

MCD was introduced in March this year and MTF has found 40% of brokers said borrowers looking to remortgage have been most affected by the new rules, with landlords second at 21%.

Despite this, only 15% of brokers said they had experienced an actual drop in business since MCD was introduced, with none seeing a decrease in bridging volume during Q2.

Tomer Aboody, director of MTF, said the results reflected the introduction of stricter affordability and stress testing, which was ultimately leading to delays to mortgage applications.

“Equally, the introduction of the consumer buy-to-let has led to a transitional period, during which brokers and borrowers alike become familiar and comfortable with this new regulatory class.

“The MCD creates an opportunity and a challenge to both the mainstream and bridging finance markets, which both sectors seem more than well placed to face.”

MTF’s sentiment survey earlier this year revealed 86% of brokers had seen a rise in bridging loan volume as a result of brokers turning to it after clients had failed to secure a mortgage. 

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