News Column

Home loans Affordability checks fail to alter lending trends

July 11, 2014

Lisa Bachelor

Moves by the Bank of England to toughen up affordability checks on mortgage lending have had little impact on people's ability to buy a property, according to mortgage lenders.

The number of loans to first-time buyers rose by 9% in May, compared with April, and was 19% higher than in May 2013, the Council of Mortgage Lenders said yesterday.

By value, lending to first-time buyers was up 11% on April and 30% higher than in May last year.

The number of loans to homeowners moving house also rose in May, up 8% from the previous month.

"With May lending figures, we get our first glimpse at the effect the mortgage market review has had on lending trends and, at least so far, the impact appears subtle rather than dramatic," said Paul Smee, director general of the CML. "First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted."

Would-be borrowers are now asked to give more detail about their spending. Borrowing is based on how much is left after regular expenditure, rather than on income, and lenders have to check they would still be able to afford repayments if interest rates rose. Lisa Bachelor

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Source: Guardian (UK)

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