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Housing Market Demand Did Not Decline Due to MMR

Housing Market Demand Did Not Decline Due to MMR

Mortgage approvals faltered off from the rising trend seen in the first of the year as early as February.  This was weeks before the Mortgage Market Review (MMR) came into effect April 26 and therefore the blame for the decline should not be solely put on the fact that borrowers are being pushed to reveal more in their test to prove they can indeed afford a mortgage or remortgage loan.

Many experts are blaming changes put into place by the Financial Conduct Authority (FCA) to promote responsible lending for the lower demand from buyers for UK property.  The MMR requires borrowers to be counseled as to their options in borrowing, they must be willing to share more intimate details in their spending and saving habits to confirm they can afford a mortgage or remortgage and they must pass a stress test designed to signal if the borrower can afford a particular mortgage or remortgage should interest rates increase.

The Bank of England released their data as to March lending and announced that the number of mortgages in March declined to 67,135 from the 69,592 approvals offered in February.  February had also shown a decline down from January’s level.  Mortgage approvals have declined in the last two months by 11.9%.

This data would indicate that there is not a housing boom in action nor that demand had taken a deep slide at the presence of the MMR since many lenders had adopted the guidelines from the FCA prior to the deadline. 

Perhaps the demand for housing has simply reflected the growth of the economy and rising consumer confidence rather than a runaway housing boom starting.  Demand is likely to remain steady as house prices are, while higher than months past, still very good and lending is still very cheap.

For those yet to seek out a mortgage and remortgage the time is still good as there remain historically low deals to be found from lenders and brokers.  

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