The number of mortgage approvals has fallen to a nine-month low in a sign that tough new affordability tests for housebuyers are having an impact on the housing market. Approvals fell for a third month running in April, according to figures from the Bank of
Anyone applying for a mortgage must now submit three months of bank statements which will be checked line by line to ensure that the borrower can withstand higher interest rates.
The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since
"The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry," said
However, housing experts said it was too soon to tell if the tests brought in by the mortgage market review (MMR) will have a permanent dampening effect on the market. Figures published last week show a still-vibrant market, with house prices in
Experts said the spectre of the MMR, brought in by the
"The new MMR regulations have temporarily slowed lending in the market," said
The slowdown over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January. Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving, compared with the previous six-month average of 34,316.
The total value of mortgages approved fell to pounds 15.7bn in April, down from pounds 16.3bn in March, while loans for house purchases dropped from pounds 10.6bn to pounds 10bn.
"This strongly suggests that the introduction of the MMR has at least temporarily taken some of the steam out of housing market activity," said
"While the rules should prevent a return to the lending practices that characterised the previous credit boom, in themselves they are unlikely to lead to a cut in mortgage approvals - after all, most lenders were already being careful about who they lent to," said Pointon.
However, he added that surging house prices could also have reduced appetite from borrowers. "House prices are simply too high to support a steady rise in demand, particularly now that mortgage rates are beginning to edge up." Economists said that until it became clear whether the slowdown was temporary or MMR had subdued the market, there was still a chance that the Bank could step in.
George Monbiot, page 31 =
The figures showed that 62,918 house purchase loans were approved during April, the lowest number since
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