The report shows that the proportion of households with high mortgage debt to income has fallen, interest payments have fallen as a proportion of income and that many people have taken the opportunity to make overpayments on their mortgages while rates remain low.
The trade body has expressed concern, however, that tightening in mortgage lenders’ appetite to grow their books early next year ahead of the Mortgage Credit Directive could 'negatively influence consumer confidence to the detriment of consumption'. In order to manage pipeline some lenders may increase rates to slow application flows. If this were to coincide with strong wage growth, it could bring forward the need for a wider rise in interest rates, meaning a rise in Bank of England Base Rate.
The report names the single biggest issue facing the market as the lack of supply of residential property, although it notes that the lack of building has begun to reverse this year and there are additional factors which would support an increase in building.
The report continues:
"Mortgage lenders have shown increasing appetite to lend on new build property and the government’s Help to Buy scheme has brought much needed reassurance to the sector. Several lenders have extended their high loan-to-value mortgage ranges and LTVs in the new build sector have also risen over the year. The market has seen several specialist lenders improve their offerings in the new build arena and while arguably there is still room for improvement on criteria, particularly for new build flats, strides have been made to increase builder confidence in post-completion sales."
AMI also encourages bodies in the buy-to-let space to 'work closely with the industry to ensure that any measures brought in by the FPC are co-ordinated with Treasury and other factors affecting the market to avoid squeezing a healthy market unnecessarily', following the news that the FPC have been granted powers over the market.
It continues that:
"Introducing uncertainty into the buy-to-let market is likely to stifle innovation and cause lenders to retreat, putting further pressure on the supply of housing.... We would question whether caps on buy-to-let lending will therefore have the desired effect of cooling investment into the UK’s private rented sector."
