The survey also showed lenders expected demand to increase further over the next three months - but that they expect that approvals to dip in the coming quarter.
Credit availability was reported to have been unchanged for borrowers with LTVs above 75% in Q2, although there was an increase in the willingness to lend at LTV ratios above 90%. Consistent with this, maximum LTV ratios increased in Q2 and maximum loan to income ratios also increased slightly. Lenders expected maximum LTV ratios to be unchanged in Q3 and expected maximum LTI ratios to fall slightly. This is the first time lenders have expected maximum LTI ratios to fall since 2012 Q1.
Some lenders noted that changes introduced as a result of the Mortgage Market Review might reduce approval rates somewhat. In addition, some lenders suggested that a tightening in lending standards on large loans with high LTI ratios may also push down their approval rate a little.
The survey says:
“Lenders again expected the approval rate to fall significantly in Q3. Some lenders noted that changes introduced as a result of the Mortgage Market Review might reduce approval rates somewhat.
“In addition, some lenders suggested that a tightening in lending standards on large loans with high LTI ratios may also push down their approval rate a little.”
Jonathan Harris, director of mortgage broker Anderson Harris, says:
"As lenders expected, demand for mortgages for house purchases increased significantly in the second quarter of this year, with lenders expecting demand to rise again over the next three months. This contradicts some other indices which suggest that the housing market is taking a breath. Demand is still strong as buyers remain confident of their ability to get a mortgage and their perception that now is a good time to buy, with more stock coming onto the market.
"While maximum LTV and loan to income ratios increased in the second quarter there is still no need for the Bank of England to intervene and introduce a cap. Lenders already expect the former to be consistent in the next quarter and for the latter to actually fall so the market is correcting itself, without the need for external interference. Lenders also expect a decline in approval rates going forward because of tougher lending rules as part of the mortgage market review and restrictions on larger loans introduced by some lenders, making it harder to get a mortgage."
