BoE: momentum in housing market continues to slow

According to the latest Money & Credit report from the Bank of England, September saw both house purchase approvals and lending below the monthly average.

Related topics:  Finance News
Rozi Jones
29th October 2014
bank of england boe

The number of loan approvals for house purchase was 61,267 in September, compared to the average of 64,720 over the previous six months. The number of approvals for remortgaging was 30,500, compared to the average of 31,632 over the previous six months. The number of approvals for other purposes was 9,241, compared to the average of 10,468 over the previous six months.

Lending secured on dwellings increased by £1.8 billion in September, compared to the average monthly increase of £2.2 billion over the previous six months.
The three-month annualised and twelve-month growth rates were 2.0% and 1.8% respectively. Gross lending secured on dwellings was £17.1 billion and repayments were £15.7 billion.

The Bank of England's Credit Conditions Survey, published earlier in the month, confirmed that lenders' willingness to lend fell in Q3.

The survey said:

"Many lenders noted that operational issues associated with the implementation of the Mortgage Market Review had pushed down on credit availability over the summer."

However, lenders expected that approval rates would increase in Q4, driven by 'market share objectives'.

Richard Sexton, director of e.surv chartered surveyors, commented:

“The mortgage market is rebalancing and settling back into a period of more tempered lending. The initial slowdown caused by the introduction of MMR has been fully absorbed into the system. But the hangover of negative publicity surrounding some aspects of the regulation – in particular the lengthier advisory processes – may be dissuading many borrowers from the market. Other factors are playing a part too. Price growth is also starting to cool, particularly in capital. Economic uncertainty is also having an effect, with borrowers unsure when interest rates will rise. The cumulative effect of these factors: potential borrowers appear to be waiting and watching, rather than moving home or buying.

“However lenders are now lowering prices to encourage borrowers back to the market with cheaper deals. The mortgage market is much more sustainable than a year ago – the new regulation has seen to that – but the bottleneck is now demand and not supply. Still, as the negative reporting dies down,  it’s not unreasonable to expect to see home lending pick back up.”

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:

“Although mortgage approvals dipped in September, lending activity for Q3 2014 remained up on the previous quarter.* While the new affordability rules may have slowed the turnover of applications as the industry adjusts to new processes, the changes also ensure a more sustainable mortgage market going forwards. Our own data shows applications via brokers rose in September and the intermediary channel has undoubtedly been strengthened by the changes.

“Lenders still have a hearty appetite for business, and fierce competition continues to result in preferential product rates. A host of high street lenders recently slashed their rates, and with more than 12,000** mortgage products currently available, consumers remain in a good position to borrow at affordable prices. Interest rates now look unlikely to rise in the immediate future, giving consumers an extra window of low mortgage costs.

“While competitive loans are still there for the taking, the Mortgage Market Review (MMR) means consumers must go the extra mile to prove they can afford their mortgage both now and in the future, which will have positive outcomes for individuals and the wider economy.  An independent broker can help consumers to successfully navigate these requirements, while also pointing them in the direction of the most suitable and affordable mortgage for them.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.