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.
Richard Sexton, director of e.surv chartered surveyors, which conducted the survey of purchase approvals, 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 the e.surv 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.
Comments
[i]Industry commentators have also voiced concerns that the tighter conditions could prompt the emergence of a shadow mortgage market, with lenders backed by private equity firms willing to take greater risk, although any creditor can have their books scrutinised by the Financial Conduct Authority.[/i] - taken from the telegrpah, interesting read. http://www.telegraph.co.uk/finance/personalfinance/houseprices/10790526/First-time-buyers-face-rent-trap-under-new-mortgage-rules.html
Cameron | [url="http://www.wolfs.co.uk/"]Wolfs[/url]
Yes lenders are causing delays as they change their requirements in line with MMR - this is deff having an impact on approvals as lenders and brokers get their heads round the new requirements
Brokers are banging their heads against the wall as lenders keep changing the goal posts and also cant deal with the volume of applications - just when we thought everything was on the way up !
I think the problem is that the interested parties with money want something different from most house buyers. Fast transactions, and also high prices, allowed for by easy credit, benefit me as an agent.
However, an over-heated market won't help the 'man on the street'. Nor, ultimately, will credit (in the form of a mortgage). I think the market over the last 5 years has shown that people will borrow too much (given the chance), and can't moderate their own risk.
The above move is probably good...although I imagine that brokers and agents will find it frustrating!