Growth in mortgage lending to be hit by MMR
Around £46 billion was lent to help people buy homes in the first three months of the year, up 37% from a year earlier, but experts warn things could be about to change.
While the monthly figures from the Council of Mortgage Lenders (CML) show that lending also rose by 4% between February and March, some experts are predicting the market is about to slow down.
With the introduction of the Mortgage Market Review (MMR) rules that will tighten up the mortgage market from 26 April, some mortgage professionals expect it to take longer for mortgages to be processed. The result would be a slowdown in the growth of mortgage lending - and the potential for some sales to fall through.
Mortgage data analyst Henry Woodcock at IRESS, said: "The mortgage market has been motoring in the early part of the year. New buyers have moved to take advantage of low rates, decent mortgage availability and the prospect of seeing their property gain value.
"With MMR coming into force in just over a week, we don't expect the market to grind to a halt by any means, but it is unlikely to hit the same speed for the remainder of the Spring."
He explained that the new rules "will likely create a bottle neck in the short-term as the time taken to secure a mortgage lengthens and buyers and lenders alike come to terms with more stringent affordability testing".
Prospective borrowers have already been told to brace themselves for lengthy interviews if they apply for a mortgage directly through a bank. Nationwide and Santander say their mortgage interviews could last two-and-a-half hours. Halifax, Leeds BS, Lloyds Bank and Yorkshire BS say theirs will last around two hours and HSBC expects them to take 90 minutes.
One mortgage broker told Moneywise this could cause delays that could jeopardise house purchases.
He explained: "Most applicants will have seen a property they wish to offer on, or more commonly, have actually offered on, and have therefore put themselves under enormous pressure from the vendor's selling agent or solicitor to confirm they have a mortgage decision in principle in place and can proceed with the sale.
"Any delay in seeing a branch-based adviser will, inevitably, potentially cause the applicants to lose the property they are purchasing. It's going to be fun and games for all new mortgage applicants."