10th July 2014
The impact of the Mortgage Market Review (MMR), which introduced stricter lending criteria appear to be “more subtle than dramatic” says an industry trade body.
The MMR, which was launched by the City regulator, the Financial Conduct Authority on 26 April put greater onus on mortgage lenders to assess the ability of potential borrowers to meet their initial and future, based on higher interest rates, mortgage payments.
But new figures for May, from the Council of Mortgage Lenders, shows that the number of loans to first-time buyers rose by 9% over the month compared to April, and this level was 19% higher than in May 2013.
In addition, by value, lending to first-time buyers was up 11% month-on-month and 30% higher than in May last year.
Both the number and value of loans to home movers increased month-on-month in May by 8%. Compared with May 2013, growth was up 9% by volume and 21% in value.
It said that reflecting these trends, overall home-owner house purchase lending in May rose 9% on April by both volume and value, with year-on-year growth in number of loans up 13% and 25% by value.
The Bank of England reported earlier this month gross UK mortgage lending was £16.8bn in May, a 2% increase compared to April and 14% higher than the total in May last year.
Notably however the Bank reported that mortgage approvals for house purchases fell for a third month running in April, and markedly, to be at a 9-month low of 62,918.
Paul Smee, director general of the CML, said: “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. 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. There was no cliff edge; lenders and intermediaries had been methodically working towards applying MMR changes for months leading up to implementation and the figures appear to reflect this.”