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CML: MMR impact on lending appears subtle

From Property Talk Live on July 14, 2014

New CML data on the profile of UK lending in May 2014, including first-time buyer, home mover, remortgagor and buy-to-let lending, shows:

– The number of loans to first-time buyers rose by 9% in May compared to April, and was 19% higher than in May 2013. By value, lending to first-time buyers was up 11% on April 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.
– 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.
– Remortgage lending dipped in May, down 18% in number and value compared to April. Compared to May 2013, remortgage lending declined 26% in volume and 15% by value.
– The monthly number of buy-to-let loans was up 4% in May with value up by 5%. Compared to April 2013, there was a 14% increase in number of loans and a 22% increase in overall value.

The Bank of England reported earlier this month gross UK mortgage lending was £16.8 billion in May, a 2% increase compared to April and 14% higher than the total in May last year.

Paul Smee, director general of the CML, commented:

“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.”

David Newnes, director of Your Move and Reeds Rains owned by LSL Property Services PLC, commented: “Despite the tides of change in the mortgage market recently, and a new wave of tighter regulation and affordability criteria, first-time buyers are continuing to sail back into the property market.  Help to Buy has forged the path for greater high LTV lending, increasing the choice on the market for borrowers, reducing prices, and making that all-important deposit more attainable. In June, lending to high LTV borrowers reached a post financial crisis high, following a 52% annual rise.

“But there is still plenty of room for manoeuvre, and current levels of high LTV lending are still a way off the pre-recession era. In fact in February 2007, the volume of high LTV lending was four times higher than in June 2014. Outside of London and the South East, the housing market recovery is still embryonic in places, and there are parts of the country experiencing very moderate house price growth.  Withdrawing support too soon might unbalance the healthy recovery and dent the consumer confidence which has driven demand and activity, which in turn got the wheels of the housing market in motion.”

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Source: Property Talk Live