The director-general of the Council of Mortgage Lenders said: “The new regulation of mortgages that takes effect at the end of April is a significant change.
“The industry is ready for the transition, although there is clearly potential for lending to be distorted temporarily over the coming months, given the magnitude of the changes and the importance of complying with regulatory expectations.”
Mr Smee added that overall the CML expected to see continuing growth in mortgage borrowing ahead “within responsible lending parameters” as the pent-up demand of the recession years finds an outlet.
His comments came as the trade body published its monthly statistics, which showed mortgage lending to homemovers and first-time buyers bucked seasonal trends and remained steady in February.
The total number of loans advanced for house purchases that month was 48,400, only slightly fewer than the 48,500 loans in January but an increase of 33 per cent on February last year.
Overall, the value of the loans advanced in February totalled £7.8bn, down from £7.9bn in January but 47 per cent up on the February 2013 total.
The total number of loans advanced to first-time buyers in February was 22,200, a 2.3 per cent increase in volume compared with January and a 41 per cent rise compared with February 2013. These loans totalled £3.1bn in value, the same as the January figure but 55 per cent up on the February 2013 figure.
The typical first-time buyer income multiple increased slightly to 3.40 times gross income compared with 3.39 in January.
The typical loan size for first-time buyers was £119,000 in February, a decrease from £119,735 in January, while the typical income of a first-time buyer household fell slightly to £35,297 from £36,408 in January.
Meanwhile, the number of buy-to-let loans advanced fell in February to 14,300 from 15,700 in January, though the year-on-year increase was 46 per cent compared with February 2013.
Adviser view
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Any fears that borrowers will be tempted to overstretch themselves can be allayed by the introduction of the MMR in a couple of weeks. Processing times for mortgage applications are likely to increase as a more forensic approach to expenditure is adopted, but it should result in a more sustainable mortgage market that works better for consumers and lenders.”
TABLE: source: CML
| First-time buyers, lending and affordability | ||||||
| Number of loans | Value of loans £m | Average loan to value | Average income multiple | Proportion of income spent on interest payments | Proportion of income spent on capital and interest payments | |
| February | 22,200 | 3,100 | 82% | 3.4 | 11.20% | 19.20% |
| 2014 | ||||||
| Change from | 2.30% | 0.00% | 82% | 3.39 | 11.30% | 19.30% |
| January 2014 | ||||||
| Change from | 41.00% | 55.00% | 80% | 3.21 | 12.60% | 19.50% |
| February 2013 |
