The three-month annualised and twelve-month growth rates were 1.6% and 1.2% respectively. Mortgage lending was £18.4 billion and repayments were £15.8 billion.
The number of loan approvals for house purchase was 62,918 in April, considerably lower than the six-month average of 70,132. The number of approvals for remortgaging was 31,703, compared to the average of 34,316 over the previous six months. The dip is
Total lending to individuals increased by £2.4 billion in April, compared to the average monthly increase of £2.0 billion over the previous six months. The three-month annualised and twelve-month growth rates were 2.0% and 1.6% respectively.
Danny Waters, chief executive of the specialist broker, Enterprise Finance, said:
"Mortgage approvals for house purchase in April were considerably lower than the six-month average and this is very much a result of the Mortgage Market Review. This weaker lending figure is likely to set the tone for the months ahead as the new regime based on tougher affordability criteria continues to bed in.
"While mortgage approvals may be down, consumer credit overall is increasing and was higher than the six-month average in April. This is very much what you would expect to see alongside a recovering economy, strengthening jobs market and a much more confident consumer. It's vital for a recovering economy that people take out credit, whether secured or unsecured, however it is equally important borrowers do not rely on the rising value of their home to eventually pay it off. We've been there before.
"The momentum in the property market seems irresistible but people should beware relying on rising prices to bail them out. With interest rate rises to come, there is every chance prices in some areas of the country could dip once again. In short, residential property should never be seen as a get-out clause."
Richard Sexton, director of e.surv chartered surveyors, explains:
“The new MMR regulations have temporarily slowed lending in the market. Borrowers must now prove that they can withstand potential interest rate rises up to 7%, as well as answering a host of detailed questions about future finances. But the slowdown has also come from the supply side. Lenders have invested time training staff and implementing lengthier advisory meetings, which has capped their capacity to process applications. It has led to an interim lending lull. But this is more than made up for by the benefits of the new system: ensuring lending is sustainable and borrowers can afford their repayments even when the base rate begins rising.
“MMR is not the only regulation putting the brakes on lending. The Bank of England are increasing stress testing of the top eight lenders, to make certain they can withstand a 35% fall in house prices – making them more resilient to any future financial problems. That means banks will need to build capital buffers, which may result in a further lending slowdown in the short-term.”
