New mortgage rules 'will slow transactions'
Posted on Wednesday, July 23, 2014
There were 65,498 house purchase approvals by lenders in March, showing the second successive monthly drop as mortgage firms test out stricter rules which will be implemented across the country at the end of this month.
The March figure was seven per cent lower than the 70,309 in February. The recent falls reverse 11 months of improvements which saw average monthly lending levels increase from 52,537 to 76,753 between February 2013 and January 2014.
The new Mortgage Market Review regulations, due to be introduced on April 26, will see increased affordability checks conducted by lenders, with the application process lengthening considerably.
Lenders are already putting in place changes to fit the new regulation, to ensure a seamless transition to the new rules in April.
Scott Burrows, director of Berkley Estate & Letting Agents, says this is a “period of transformation” for the industry.
“New regulations have played a part in the slowdown. Lenders are trialling systems, tightening up affordability checks, training staff and putting in place lengthier advisory processes. House purchase lending has dipped as a result” he says.
Meanwhile recent research has also shown that the number of high LTV borrowers has now risen to one-in-six of all successful applicants. There were 9,628 loans to borrowers with a deposit worth 15 per cent or less of the total value of their property in March - this is half as much again as the figure a year earlier.
This confirms a recent Bank of England Credit Conditions Survey which showed that high LTV loans increased significantly in the first three months of this year, fuelling some observers’ concerns of a possible housing market bubble.