Taylor Scott International News
Mortgage approvals in the UK have been steadily improving over the past five months but are still below where they were a year ago, according to the latest figures to be published. Gross mortgage borrowing in May was £10.4 billion, similar to April but 5% lower than in the same month last year, the data from the British Banking Association shows. Much of this could be to tougher new approval rules that were introduced in April 2014. For house purchase approvals, the annual comparison, adjusted for the effect of the new rules, suggests a year on year fall of 3%. Indeed, Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), pointed out that there has now been a fourth successive monthly rise in mortgage approvals which suggests the high street banks have got to grips with recent changes to mortgage regulations. ‘All the same, there were 5,000 fewer approvals in May than was the norm in the six months before the Mortgage Market Review (MMR) took effect. Clearly there is still some way to go before lending activity on the high street is fully restored,’ he said. ‘Looking ahead, our chief concern is that UK mortgage borrowers face another wave of changes headed their way in the shape of the Mortgage Credit Directive (MCD). The short term threat is that another transitional period will slow the applications process and reduce the industry’s capacity to lend,’ he explained. ‘In the long term, extra layers of regulation threaten to squeeze more consumers out at the margins. When the rules change so often, it is very hard to judge the right time to say enough is enough before we are left with a far more subdued market than anyone intended. Balancing consumer choice and financial safety is a constant challenge, and the Bank of England should stand ready to act if the pendulum swings too far in either direction,’ he added. According to Steve Bolton, chairman of Platinum Property Partners, figures from the BBA show that there is life in the mortgage market, indicating that there has been a 2% jump in general mortgage approvals over the last 12 months. ‘However, the figures also show that lending to homebuyers is down on last year by 3%, meaning that access to the property ladder is becoming more and more difficult for many people. This means that the rental sector is likely to come under increased pressure as growing numbers of people look to it for longer term solutions to their housing needs,’ he said. ‘It is therefore of the upmost importance that the market is able to meet the needs of a growing population of renters, and provide them with high quality and affordable housing. While renting is now a lifestyle choice for many young people, the majority still aspire to own their own home and certain types of rental properties can give would be buyers an advantage in times… Continue reading →
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