The effects of the new and tougher mortgage regime are being felt on the market – but in a subtle rather than dramatic fashion.
The Council of Mortgage Lenders says that all lending, other than remortgaging, was up in May – the first full month after the Mortgage Market Review.
The number of loans to first-time buyers rose by 9% in May compared to April, and was 19% higher than in May 2013. By value, lending to first-time buyers was up 11% on April and 30% higher than in May last year.
Both the number and value of loans to home movers increased month-on-month in May by 8%. Compared with May 2013, growth was up 9% by volume and 21% in value.
Overall home-owner house purchase lending in May rose 9% on April by both volume and value, with year-on-year growth in number of loans up 13% and 25% by value. Altogether there were 57,900 loans for house purchase.
Buy-to-let lending was up 4% in May compared with April, and 14% higher than in May last year.
Remortgaging dipped 18% on a monthly basis and by 26% annually.
Paul Smee, director general of the CML, said: “With May lending figures, we get our first glimpse at the effect the Mortgage Market Review has had.
“At least so far, the impact appears subtle, rather than dramatic. First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted. There was no cliff edge.”
Meanwhile, valuations firm e.surv – part of LSL – estimates that almost one in five approvals in June were to borrowers with a deposit of 15% or less.
That figure compares with one in nine last year.
Comments (5)
I actually agree with both the comments here and am aware of how different the markets are outside London. The report is, however, simply that – a report of the CML's figures and views, which did not mention that May's lending would have been approved earlier. Like easternagent, I too wonder how the CML will report things in a month, two months' and three months' time.
Don't remember you joining in the chats before Ros! It this the first of many or a two off? ( you kinda have to answer that question) #placeyourbetsnowBanzEYE
You're quite right, I do very rarely join in chats and I'm sure this won't change. I just wanted to make the point that I agreed with the readers, but was also only factually reporting on what the CML had said.
This article seems in stark contrast to the industries experience and data from the Bank of England – No offence meant and I am sure you can defend putting up this article but it seems not to have been investigated and is being published as factual?
http://www.independent.co.uk/news/business/news/mortgage-approvals-fall-to-11month-low-as-housing-market-cools-down-9573566.html
I wonder if Mr Smee is just trying to convince himself. His observations are obviously based on the May market where mortgage offers had already been made before the 'goal posts were changed' for many buyers. I think most agents outside of London, certainly those in the East of England, would agree that there has been a dramatic decrease in the number of applicants registering and/or making offers in June. I have had several would be purchasers have to pull out of a purchase because their lenders have revised their criteria. The market is distinctly quieter in the last two months than it was up until from Janaury until May. I for one will be waiting to see if Mr Smee makes the same claim for June. Somehow I for one don't think he will be able to.
As for the government saying the market is overheating across the country, if only they would ask agents at the coal face rather than so called 'market experts' and stop listending to the national press and quoting property portals who quote market rise statistics based on 'asking prices' rather than prices that have actually been achieved for property then they may get a truer perspective.
The push to build 'new homes' is in my view a big mistake from governments point of view. If they were to stimulate the 'second hand' property market then more people would move and as we all know home movers spend money in the high street on new carpets, new furniture, at the garden centre etc., all of which puts money back into both the local and national economy, which in turn creates jobs which leads to pay rises etc., which gets spent in the high street – and so it goes round. Come on Mr Chancellor, its not rocket science, and at present all you are doing is lining the pockets of the big house-builders. Just think of all that lovely Stamp Duty and VAT you could be getting if you were stimulating more house moves not solely new home moves where there is generally little peripheral high street spending as a knock on effect.
As for stimulating new homes building my local builders still can't get funding from their bankers to take on new small build projects.
Rant over- lets get on with the day and something productive.