11th August 2014
The number of home loans granted to borrowers enjoyed an uptick in June indicating that the introduction of tougher lending rules has failed to ease the pace of the UK’s property market.
According to numbers from trade body, the Council of Mortgage Lenders (CML), home loans to buyers increased month-on-month in June to 60,500, up 5% compared to May. Notably the value of these loans totalled £10bn, a rise of 6% on May. Compared to June 2013, the number of loans increased by 15% and the value of lending by 23%.
In the April to end of June period this year, the number of loans advanced totalled 171,000, a 17% increase on the first three months of the year and up 19% on the same period in 2013. The value of the loans at £28.2bn was 19% higher on the first quarter and up 29% on the second quarter of 2013.
In addition, there were 28,600 first-time buyer loans in June – 7% more than in May, and 19% up on June 2013. By value, there was £4.2bn of lending to first-time buyers in June – 11% up on May and 27% higher than June last year. Lending to home movers also grew, but by less. In June, the number of loans to movers was 31,900, 4% up on the previous month and 11% on June last year. By value, lending to movers was £5.9bn, 5% up on May and 23% up on June last year.
At the end of April, the City regulator, the Financial Conduct Authority introduced new affordability tests, in the shape of the Mortgage Market Review, which meant mortgage lenders had to more rigorously check the finances of borrowers, especially in terms of whether they could they afford their repayments when interest rates rose.
Commenting on the latest numbers, Paul Smee, director general of the CML, said: “For the second month running since new FCA rules took effect, lending characteristics remain similar to the market beforehand. We now feel confident that, as we would hope, the MMR effect is more gentle dampener than hard brake. As we recently suggested in our revised forecasts, lending levels should continue to increase modestly over the course of the year, driven mostly by house purchase but with remortgaging also recovering.”