Property & Mortgage Market Quiz

Comprehensive CEMAP property and mortgage market principles quiz covering essential market knowledge required for the Certificate in Mortgage Advice and Practice. Test your understanding of property types, mortgage products, market dynamics, and regulatory frameworks that every mortgage adviser must master.

CEMAP Topics Covered: property types and classifications, mortgage product features, interest rate types, loan-to-value calculations, affordability assessments, market regulation, property valuation methods, and mortgage application processes.

This quiz is specifically designed for CEMAP students preparing for their exams and mortgage advisers maintaining their professional market knowledge.

Property & Mortgage Market Quiz

1. What is the primary purpose of a mortgage in residential property purchases?

A. To enable buyers to borrow funds secured against the property at a low interest rate
B. To be able to let the property out
C. To eliminate the need for a deposit when purchasing a home
D. To give lenders automatic repossesion right on default

2. Why are residential mortgages considered lower risk for lenders compared to unsecured loans?

A. Because they are insured by the government
B. Because the loan is secured against the property through a legal charge
C. Because it is mandatory for residential borrowers to have excellent credit
D. Because mortgage interest rates are fixed for long timeframe

3. Which of the following best describes the UK mortgage market since the 1980s?

A. Monopolistic with limited competition
B. Dominated exclusively by government-backed lenders
C. Highly competitive due to deregulation and borrower sophistication
D. Dominated by a single lender

4. What was a major cause of the 2007-08 credit crunch in the mortgage market?

A. Excessive regulation preventing lending
B. Government mandated lending
C. Government restrictions on mortgage securitisation
D. Lenders relaxing criteria and issuing high-risk sub-prime mortgages

5. What is 'securitisation' in the context of mortgages?

A. Bundling mortgages and selling them to other lenders
B. Converting property deeds into government bonds
C. Offering fixed-rate mortgages with no early repayment charges
D. A process where borrowers insure their mortgages against default

6. Which UK bank was nationalised in 2008 due to liquidity issues linked to risky mortgages?

A. Barclays
B. Northern Rock
C. HSBC
D. Lloyds Banking Group

7. How did the credit crunch affect interbank lending rates?

A. Rates decreased significantly due to surplus liquidity
B. Rates were abolished temporarily
C. Rates increased as banks became reluctant to lend to each other
D. Rates remained stable due to government intervention

8. What was a key consequence of the credit crunch for UK mortgage lending criteria post-2008?

A. Lenders reduced deposit requirements
B. Sub-prime lending increased to stimulate the market
C. Mortgage interest rates were frozen indefinitely
D. Lenders adopted stricter affordability checks and higher deposit demands

9. What was a major factor contributing to the UK housing market recovery after 2013?

A. Government initiatives to boost lender liquidity and lower interest rates
B. A sudden decrease in demand for mortgages
C. The abolition of stamp duty land tax
D. A sharp decline in property prices across major regions

10. Why did London's housing market experience faster price growth than other UK regions?

A. Because of economic struggle in the north
B. Because of limited supply, high demand, and commuter belt influences
C. Because of reduced tax incentives for living there
D. Due to government rent controls outside of London

11. What impact did the COVID-19 pandemic have on UK housing demand in 2020-21?

A. Demand decreased as people avoided long-term financial commitments
B. It became mandatory for lenders to sign up to the Mortgage Charter which lowered demand
C. Demand shifted from city flats to homes with outdoor space, boosting commuter belt prices
D. House prices fell uniformly across all regions

12. What was the main reason for the slowdown in UK house price growth in 2023?

A. A sudden drop in inflation and interest rates
B. An oversupply of new housing developments
C. Excessive regulation
D. Rising interest rates

13. Why are first-time buyers crucial to the overall health of the housing market?

A. They enable existing homeowners to sell and move up the property ladder
B. They increase rental demand, making rent more affordable
C. They exclusively purchase new-build properties
D. Government programmes require them to be able to function

14. Which government policy was introduced to support first-time buyers?

A. Tax relief on mortgage interest payments
B. More favourable Stamp Duty Land Tax arrangement
C. A ban on buy-to-let mortgages below £200k property valuation
D. Fixed mortgage rates for 10 years

15. What challenge do first-time buyers face in high-price areas like London?

A. Oversupply in the workforce
B. Lack of mortgage products available
C. Difficulty in securing large enough deposits due to high property prices
D. Government restrictions on homeownership

16. How do high interest rates typically affect the housing market?

A. They increase demand for mortgages due to lower borrowing costs
B. They have no impact on mortgage lending
C. They encourage speculative property investments
D. They reduce affordability, leading to lower demand and falling prices

17. What is the Bank of England's inflation target as measured by the CPI?

A. 2%
B. 1%
C. 3%
D. 2.5%

18. How does the Monetary Policy Committee influence inflation?

A. SONIA price adjustments
B. By adjusting base-rate to control spending and borrowing
C. By imposing taxes on mortgage lenders
D. Power to freeze mortgage product interest rates

19. What is the relationship between general inflation and house price inflation?

A. House price inflation always matches general inflation
B. General inflation has no correlation with housing costs
C. House price inflation typically outpaces general inflation
D. High general inflation always leads to falling house prices

20. What is the sterling overnight index average?

A. A government scheme for first-time buyers
B. A type of sub-prime mortgage
C. A measure of regional house price variations
D. The interbank lending rate used as a benchmark for mortgages

21. What is a tracker mortgage?

A. A mortgage where the interest rate follows the Bank rate or interbank rate
B. A mortgage where the rate can change at anytime
C. A mortgage exclusively for buy-to-let investors
D. A government-subsidised mortgage for low-income buyers

22. What was a key outcome of the Mortgage Market Review (2014)?

A. Lenders were required to relax affordability checks
B. Stricter affordability criteria were imposed on mortgage lenders
C. Mandatory capital and interest repayment on residential property above a £300k valuation
D. Sub-prime lending was encouraged to boost the market

23. What is a 'basis point' in financial terms?

A. A fixed fee charged on all mortgage applications
B. A measure of property price fluctuations
C. One-hundredth of one percent
D. A type of mortgage insurance

24. How did the temporary increase in the SDLT threshold (2020-21) affect the housing market?

A. It caused an immediate drop in house prices
B. It led to a freeze on all new mortgage approvals
C. It only applied to buy-to-let properties
D. It boosted demand as buyers rushed to benefit from tax savings

25. What trend has been observed among first-time buyers in recent years?

A. They are older and need larger deposits due to rising prices
B. They are younger and require smaller deposits than in the past
C. They largely rely on government grants for home purchases
D. They avoid fixed-rate mortgages due to high interest rates