28th May 2015
The latest statistics from the British Bankers’ Association (BBA) suggest that housing market activity is once again on the up after slowing down in the latter months of 2014.
The BBA reported that mortgage approvals for house purchases rose for a fourth month running in April – and at a faster rate – to be at a 10-month high of 42,116.
This was up from 39,203 in March, 37,765 in February and a 20-month low of 35,990 in December.
Mortgage approvals for house purchases had previously retreated to the December low from 42,482 in June 2014. Even so, at 42,116 in April 2015, mortgage approvals were still down by 14.9% from the 76-month high of 49,507 seen in January 2014.
Commenting on the BBA’s findings, Howard Archer, chief UK and European economist at IHS Global Insight asserted that the falling back of mortgage approvals from the January 2014 peak level was “clearly influenced” by the introduction of the new Mortgage Market Review (MMR) regulations that came into effect in April 2014.
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.
Archer said: “It is likely that many lenders had to adapt their procedures, such as introducing more rigorous interviews with prospective borrowers and checking facts. This likely delayed the processing of mortgages.”
IHS Global Insight has raised its forecast house price increase in 2015 to 6% from 5%, partly due to the increased upward impact on prices coming from a lack of properties on the market.
“We also suspect that the housing market will benefit from reduced uncertainty following the decisive general election result,” added Archer.
“The April BBA mortgage approvals data fully tie in with our view that housing market activity has bottomed out and will pick up fairly gradually over the coming months.”