The change is a direct result of the Mortgage Market Review, which comes into effect this week and signals a rise in rates offered by banks. It is also set to become increasingly difficult to get a mortgage from the banks as they are concerned about borrowers’ ability to service their loans and will introduce more detailed questions about income and how applicants spend their money.
This increasingly convoluted process will lead to an increase in appetite for peer-to-peer lending platforms as customers search for a more straightforward application process and greater flexibility of terms. The reforms outlined in the MMR are aimed at ensuring continued access to mortgages for those who can afford it. However, in seeking to eradicate malpractice, they risk marginalising borrowers who are prepared to take risks in return for higher rewards.
Christian Faes, co-founder of LendInvest, said:
"The application process for borrowers to access traditional forms of mortgage funding has not only become more difficult but also more time consuming. A longer process is also a more expensive one for the borrower, highlighting the need for alternative, flexible sources of finance.
“Although we are clearly supportive of measures to make mortgage lending more secure, we aim to do so without undermining key components of our business model such as flexibility, higher returns, trust and ease of application.
“We place more emphasis on doing our own due diligence and putting stringent underwriting procedures in place so that we can continue to make the loans secure without burdening our customers.”
