Mortgage application approvals on the up
15:25 29 July 2014
The number of home buyers having mortgage applications approved recovered to a four-month high in June, according to Bank of England figures.
Some 67,196 approvals were made for house purchase last month, marking an eight per cent jump on the month of May, which was the first full month after stricter mortgage lending rules came into force.
The figures were released as a separate survey of home owners was published which found that two-fifths of them think it is now harder to get a mortgage than it was three months ago.
New rules introduced at the end of April under the Mortgage Market Review (MMR) force lenders to ask mortgage applicants for more details about their regular spending habits, which often involves applicants having to produce more paperwork to back up what they say.
Lenders also have to apply “stress tests” to make sure that a borrower would still be comfortable with their mortgage repayments as and when interest rates rise.
Several studies have indicated that the MMR has had an impact on the housing market, with lenders needing to adjust to the new rules and potential buyers showing signs of becoming more cautious, particularly in areas like London which have seen house prices surge strongly over the last year. Speculation over when the bank rate is likely to move off its historic 0.5pc low is also said to have had a dampening effect on housing market activity.
The Bank’s figures show that despite June’s upswing in mortgage approvals for house purchase, the latest monthly total still sits below an average of 68,240 seen over the previous six months.
Richard Sexton, director of e.surv chartered surveyors, said the figures indicate that a “temporary log-jam in the mortgage market is beginning to clear”.
He said: “Lending slowed slightly after MMR was introduced, as banks adjusted to lengthier advisory sessions and longer processing times. The recent lending pick-up shows this period of transition is smoothing, and the backlog of applications caught in the system starting to reduce.”
The Bank’s data was released as a survey of 7,810 home owners by property website Zoopla found that 40pc of those surveyed believe that securing a mortgage is more difficult than it was three months ago.
Some 92pc of those surveyed expect UK property prices to increase over the next six months, slightly down from a four-year high of 95pc when the same question was asked earlier this year.
The typical increase in property prices is expected to be 7.6pc over the remainder of the year, according to the Zoopla research.