Photo: James Stringer
61,267 mortgages were approved in September, according to the Bank of England, a significant drop from 64,054 approvals in August and a 14-month low.
The fall follows the introduction of Mortgage Market Review restrictions earlier this year, designed to cool down activity and avoiding a housing bubble.
Howard Archer, chief UK and European economist at IHS Global Insight, though, says that the impact of the MMC introduction is less of a factor so late in the year: “That mortgage approvals are still falling and in September were 19.9% below their January peak levels – after lenders have now likely got to grips with the new mortgage regulations – points to an underlying moderation in housing market activity.”
Nonetheless, the MMR has changed the lending landscape for buyers, with those on lower incomes less active under the new affordability conditions.
According to the Mortgage Advice Bureau, consumer appetite for mortgage finance is now increasingly coming from higher earners. Using data from over 250,000 monthly searches for mortgage products via price comparison and broker websites, the latest MAB Tracker shows aspiring buyers searching for a new mortgage had an average combined income of £56,559 in Q3 2014, up 5 per cent from Q2 and up 21 per cent year-on-year.
The rise in incomes suggests the new focus on affordability assessments under the Mortgage Market Review (MMR) regime is attracting buyers with greater financial resources behind them.
The proportion seeking terms of 30 to 39 years rose by five percentage points from 17% in Q3 2013 to 22% in Q3 2014, while at the other end of the scale, the proportion searching for 15 to 24 year terms also rose from 17% to 21%. These rises highlights the changes occurring at the extreme ends of the market: with affordability stretched, younger buyers are likely to be interested in longer terms that allow them to spread their mortgage repayments, but with restrictions on lending beyond people’s normal retirement age, older borrowers are under pressure to fit their repayments into their working lives.
Brian Murphy, head of lending at Mortgage Advice Bureau, comments: “While there is still plenty of appetite from prospective purchasers, it is important that the industry continues to work hard to promote affordable options such as shared equity and shared ownership to maintain access to the property ladder.”
Source: The Movechannel