Mortgage lending up by a third, but new rules could put brakes on flying market
Loans worth £46.3bn were advanced to homeowners between January and March, a 10 per cent decrease from the last three months of 2013, but a 37 per cent increase on the first quarter of 2013.
In March, lending was an estimated £15.4bn, 4 per cent higher than February’s total and 33 per cent higher than March last year.
However, new mortgage lending rules coming into force on 26 April under the Mortgage Market Review (MMR), could put the brakes on what was previously a flying market.
The rules, implemented by the city regulator the Financial Conduct Authority (FCA), are designed to ensure people only take out a mortgage they can afford, and mean lenders will have to carry out much more stringent affordability checks on customers.
Simon Crone, of mortgage insurer Genworth, said: “The traditional Spring bounce in lending may not occur in 2014 due to a combination of factors most notably the MMR rules.
“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 during the next quarter 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.”
In a warning for first-time buyers, he added: “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. Even with the growing availability of 90/95 per cent LTV mortgages first-timers still have considerable issues to overcome in terms of saving for a deposit and meeting these new criteria conditions from lenders.”