THE NUMBER of mortgage approvals for house purchases in the UK fell for a third month in April, despite the overall recovery of the housing market during the last year.
There were 42,200 mortgages approved last month, according to the British Bankers’ Association (BBA). The figure is down from 45,000 in March, and has fallen by nearly a fifth from a recent high of 50,000 in January.
The number of mortgages is still up significantly from the 33,000 recorded during April last year.
Last month’s level was the lowest that had been recorded since August 2013, bucking the overall trend of the market since 2013.
Some commentators suggested the mortgage market review (MMR), a set of new regulations which came into force at the end of April, was the major cause of the decline.
“While the MMR only came into effect on 26 April, it is evident that some banks raised their mortgage lending standards before the new regulations kicked in. These regulations 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,” said Howard Archer, chief UK economist at IHS Global Insight.
If correct, the early action by banks to fulfil the requirements of the MMR may have pushed lending into the earlier part of 2014.
Despite the drop in credit for house purchases, Archer added that the analysts still expect an eight or nine per cent jump in house prices across the UK this year, partly down to a severe imbalance between the supply of and demand for homes.
The average loan approved for a house purchase in April was £164,500, rising from an average of £159,000 in the previous six months.