Off the boil but simmering nicely?
The British Bankers’ Association (BBA) – a trade association for the UK banking and financial services sector – recently reported that mortgage approvals were down for the fourth month in a row in May, and that Land Registry figures showed just a small monthly increase in prices of less than half a percent.
In Essex and Suffolk we have certainly seen the feverish activity of springtime come off the boil a little, which is good news for the longer-term health of the market. It is still a very busy time however with plenty of activity to report.
One of the biggest issue home movers are facing now, is the length of time it is taking to get house sales ‘over the line’ to exchange of contracts.
It seems lenders are taking longer to process mortgage applications because the process has become more complex since the Mortgage Market Review.
New borrowers are now being affected by two new rules introduced by The Bank of England last month. They have to meet more affordability criteria as lenders assess whether they could still afford their mortgage repayments if the interest rate were to increase by 3% from the time of the loan. In addition, limits have been placed on lenders. They can only make loans greater than 4.5 times a borrower’s income available to 15% of their new mortgage customers.
Our friends in the legal profession report that they have a huge caseload of transactions to handle at present. And our Survey team can sympathise with this as they are working flat-out to complete mortgage valuation work.
As the changes to mortgage lending take effect, the system is peddling hard to keep delays to a minimum but as our sales progression teams know, it takes a lot of hard work and know-how to guide transactions through to completion.
The strong economy and stable inflation and interest rates are continuing to provide the basis for further strength in the housing market, with shortage of stock continuing to be a problem in many areas.
Seasonally, we expect a quieter market during July and August but we know many people are planning a move later in the year. This traditionally means new properties coming to the market in September and October and we have every reason to believe that this autumn will be very busy.