The new affordability tests, which ask a variety of quite tough and nosey questions, are said to be the main cause for this, and hence having a knock on effect on the housing market.
The approvals fell for a third month in April 2014, according to the Bank of England, and these new rules are said to be part of the reason.
The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since July 2013. It’s also markedly lower than the previous six months’ average of 70,132.
Analysts reckon that these figures, along with those of an increase in manufacturing, showed that the UK economy was undergoing a hoped-for rebalancing away from housing and consumer-dependent growth to an industry-based model.
A man with a great name – Samuel Tombs, who is UK economist at Capital Economics – had this to say:
“The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry”
So the economy may be showing signs of recovery, but be cautious, as these tests may actually really start dragging on the property market. While it’s still happening with house-buying and that, and the market is still vibrant with house prices in England and Wales rising 6.7% in April compared with the same month last year, according to the Land Registry.
The slowdown in approvals over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January, when total lending peaked at 124,358 approvals.
Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving house. This is below the previous six-month average of 34,316.
The total value of mortgages approved fell to £15.7bn in April, down from £16.3bn in March, while loans for house purchases dropped from £10.6bn to £10bn.
So that’s all super news if you ever do find yourself on the property ladder.
source: bitterwallet.com
