The British Bankers’ Association (BBA) has reported that mortgage approval volumes recovered slightly in June following the introduction of the Mortgage Market Review, which had a limited impact on application processes as the rules were bedding in.
Net borrowing on personal loans and overdrafts is now expanding, instead of card borrowing, reflecting improving consumer confidence.
In addition, the BBA said improved lending growth is appearing in manufacturing, wholesale and retail sectors.
Richard Woolhouse, chief economist at the BBA, said: “These figures show that mortgage approvals are rising again after four months of decline. That’s encouraging because those decisions are a leading indicator of what’s happening in the housing market.
“But the jury is still out on exactly how the new rules are affecting customer applications or approvals.
“Nevertheless, the higher demand for personal loans suggests that the consumer’s confidence in the recovery is growing.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Mortgage approvals are on the rise once more after four months of decline, which may come as a surprise as many agents are now talking of a cooling off in the housing market. However, the mortgage market remains busy, with many borrowers taking advantage of the cheap rates available.
“There has been much debate over the impact of the new mortgage rules on lending volumes. It is certainly trickier to get a mortgage, with different questions being asked and much more scrutiny of the information provided. However, it is not impossible to get funding and if you use a mortgage broker they will steer your application through.
“Remortgaging is down on the same period as last year – perhaps surprising with the excellent mortgage rates still on offer and the fear of an interest rate rise which should encourage borrowers to ditch their lender’s standard variable rate. MMR is likely to be having an impact here: either homeowners are struggling to remortgage under the new rules or worry that they will, and so are not bothering even trying. However, with an interest rate rise coming at some point it is important that borrowers plan ahead and ensure they can afford their mortgage.”
