Mortgage lending up more than a third
But new mortgage regulations could put a break on continued rise
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Thursday 17 April 2014
Gross mortgage lending was an estimated £46 billion in the first three months of this year, according to the Council of Mortgage Lenders, an increase of 37 per cent compared to the same period in 2013.
In March alone, mortgage lending was an estimated £15.4 billion, four per cent higher than February and a third higher than March last year.
"There are currently no signs of significant market disruption, arising from the imminent application of new lending rules associated with the Mortgage Market Review," said CML chief economist Bob Pannell. "While some mortgage lending indicators have eased back gently, this is from the very high levels of recent months."
Simon Crone, Vice-President Europe at mortgage insurance provider Genworth said: "It will be intriguing to see the lending figures for the next few months as it is highly likely lenders will pull back on their lending levels as they seek to ensure their compliance with the new regulations plus the tighter affordability rules mean that a number of borrowers will not be able to access finance as they would have pre-MMR.
"For first-time buyers looking for mortgages in the next few months the market may not be accommodating as it was at the start of the year. First-timers still have considerable issues to overcome in terms of saving for a deposit and meeting these new criteria conditions from lenders."
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: "The lending market continues to strengthen as a result of the combination of cheap finance and lenders with a real appetite to lend. With the MMR introduced next weekend, some borrowers will find the mortgage application process more protracted but with many lenders having already introduced the new rules, it should be a fairly smooth transition on the whole."
Richard Sexton, director of e.surv chartered surveyors said Help to Buy is supporting the bottom of the market by making mortgages more accessible. "One in six loans are now to high loan-to-value borrowers," he said, "meaning it is now relatively easier for first-time buyers to tap into the property market.
"But the new MMR regulations will ensure that even as lending is increased, the recovery remains responsible. Borrowers will be stress tested to make sure they can afford future interest rate rises. Now wage growth has overtaken inflation, a base rate rise may happen sooner than originally thought. That will be the next big move for lending, and we may see a temporary slowdown as banks adjust to the new, tighter rules."
A report from Precise Mortgages shows that nearly a third of people believe access to mortgage is improving but is still not good enough, with two thirds still concerned about their ability to save a large enough deposit.
"The research presents an interesting conundrum," said Alan Cleary, Managing Director of Precise Mortgages. "On the one hand confidence has returned and this is being rightly celebrated across the industry but there appears to be a delay in this buoyancy filtering down to the consumer. Ultimately, the market is there to serve them and yet many of them feel unserved by lenders and concerned that access to the market is denied to them.
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