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Home buying lending in the UK has started to decline amid concerns that mortgage regulation is having an impact on the market. The latest figures from the Council of Mortgage Lenders show that lending fell in August compared to July, the first month on month drop in house purchase lending volume since February this year. Lending fell across all sectors. First time buyer lending fell by 4% compared with July but it still 9% up on August 2013. Lending to home movers declined by 3% but is up 7% on August last year. Remortgage lending fell 4% month on month and is 11% down on the same month last year. Buy to let lending fell 13% but increased 11% compared to August last year. Total gross lending in August was £18.1 billion, some 8% lower than July when it was £19.7 billion, but 10% higher than August last year when it was £16.4 billion, according to the Bank of England. ‘The lending climate had a glass half full, glass half empty feel about it in August. On the one hand it saw a decline in all lending types month on month, which would suggest a levelling off of the market, with remortgaging remaining flat. Yet, on the other hand, we saw the highest August house purchase lending levels since 2007,’ said Paul Smee, director general of the CML. He pointed out that recent Bank of England Credit Conditions Survey expects an upward trend in remortgaging in the final months of the year and overall, these figures give no support to any fears of a developing bubble in housing. ‘This has been a year of major change, and the market has shown significant resilience and responsiveness to the changing environment, improving the availability of lending without compromising financial stability, as the Bank of England’s assessment last week highlighted,’ he added. According to David Newnes, director of Your Move and Reeds Rains, the change is due to shifted lending conditions. ‘Securing mortgage finance is not a conundrum restricted to first time buyers, but is a considerable hurdle for landlords too. Demand for rented accommodation is climbing, and there’s little sign of this stopping,’ he said. ‘Secure house prices and spirited tenant demand are encouraging budding buy to let investors and existing landlords to add to the number of available homes to let. Balancing the asymmetry between supply and demand depends on the growing number of buy to let investors being able to acquire affordable mortgages, in order to broaden the pool of rental accommodation on offer and keep rent rises at sustainable levels,’ he explained. ‘The government and Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time. The benefits of more investment will be felt in tenants’ back pockets at the end of the month, as the strain of rent rises eases further,’ he added. Continue reading →
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