New rules designed to make it harder to take out a mortgage have had little impact on the ability of people to buy property so far, according to mortgage lenders.
The number of loans to first-time buyers rose by 9% in
"With May lending figures, we get our first glimpse at the effect the mortgage market review (MMR) has had on lending trends and, at least so far, the impact appears subtle, rather than dramatic," said
In April new changes came into force, following the City regulator's MMR, which have meant that would-be borrowers are now asked to give more detail about their spending when they apply for a home loan. Borrowing is based on how much they have left after regular expenditure, rather than on their income, and lenders have to check that people would still be able to afford repayments if interest rates rise.
The rules do not apply to buy-to-let (BTL) lending and there is evidence that landlords are continuing to invest heavily in a competitive rental market. The number of BTL loans taken out to buy properties – rather than to remortgage – rose 7% from April and 21% annually, according to the CML. The loans totalled £1.1bn in value, 38% higher than in
Some lenders are expected to focus on BTL to drive up volume, with several already having improved their range of BTL loans in recent weeks. For example, Accord, a major BTL lender, has increased its maximum loan size to £1m from £300k, while Platform, Post Office and Virgin have all improved their offers to landlords, according to broker SPF Private Clients.
"The CML figures show that the buy-to-let sector continues to perform well," said
In contradiction to the CML, the
Anderson said the impact of MMR was "too early to call". "While some lenders were MMR-compliant ahead of the official launch at the end of April, using May data to assess the impact of the new rules is perhaps premature," he said. "People are still able to take out new mortgages and to remortgage but it is taking longer, and borrowers may find they have to compromise in terms of rates and loan-to-values."
In contrast to the increased lending for house purchases, the number of remortgage loans declined markedly in May. It fell 18% month-on-month and 26% on May last year.
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