New Mortgage Rules Will Slow Down
UK Property Transactions
65,500 property purchases were approved by mortgage lenders in March 2014, showing the second successive monthly drop in the number of property transactions as mainstream mortgage lenders implement stricter rules which will be rolled out fully at the end of April 2014.
The figures for March were 7% lower than the 70,309 mortgage approvals recorded in February 2014.
The recent falls in the number of mortgage approvals are a stark contrast to the 11 months of continuous 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 26th April 2014, will see increased financial and affordability checks conducted by mortgage lenders, with the mortgage application process lengthening considerably.
Mortgage lenders are already making changes to conform with the new regulations, to ensure a seamless transition to the new rules in April.
Director of e.surv chartered surveyors, Richard Sexton, which conducted the survey of purchase approvals, said:”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 have now risen to 1 in 6 of all successful applicants.
There were 9,628 loans approved for borrowers with a deposit worth 15% or less of the total value of their property in March – this is half as much again as the figure was a year earlier.
This confirms a recent Bank of England Credit Conditions Survey which showed that high Loan-To-Value (LTV) loans increased significantly in the first three months of 2014, fuelling concerns of another possible property price bubble.
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