Connells Survey & Valuation has reported April saw valuations activity drop by 15 per cent compared with March, as the firm cited what it terms a “correction” in the market in the immediate aftermath of the the Mortgage Market Review which came into force last month.
The month-on-month fall following the implementation of the new rules, which in particular introduced tough new affordability checks, leaves the total number of property valuations for all purposes at the same level as was seen exactly one year ago in April 2013.
Connells findings come just weeks after the Bank of England revealed if the Mortgage Market Review failed to dampen the market and stem rises in property prices it may be forced to step in.
Mark Carney, the governor of the Bank of England, said in a televised interview at the weekend that capping the size of mortgage ratios to salaries was one measure the bank was considering to controlling the housing market.
This 0 per cent annual change in April activity represents a stabilisation of the housing market, following March’s 10 per cent annual fall in the total number of valuations, according to Connells.
John Bagshaw, corporate services director of Connells Survey & Valuation, said “The housing market is undergoing a temporary correction as lenders move to enforce stringent new affordability rules.
“This has fed through into valuations activity – both as volumes feeding through the system have dipped, and as the mortgage application process now takes longer in each case.
“However, despite the monthly dip in activity, the number of valuations carried out in April was still level with the same month in 2007.
“When new regulations come into play we would expect a transition period associated with the switch to new processes.
“But over the course of the year, valuations levels will recover, leading to a healthier and more sustainable housing market overall. Demand for all sorts of property remains extremely high, while lenders remain willing to expand their balance sheets.”
In spite of the overall ‘correction’, Mr Bagshaw said first-time buyer activity remained 3 per cent more than this point last year.
Meanwhile on a monthly basis the number of valuations on behalf of first-time buyers saw the least dramatic dip alongside established home movers, down 13 per cent from March. The fastest monthly drop was seen in the number of buy-to-let valuations, down 19 per cent compared with March.
In spite of this, the level of buy-to-let activity remained 5 per cent ahead of April 2013, the most positive sector on an annual basis.
Remortgaging saw a similar trend compared with March, down by 18 per cent bringing the number of remortgaging valuations to levels 5 per cent below April last year.
Mr Bagshaw said: “Remortgaging work has seen a sharper dip than average for two main reasons. Firstly this work is the most affected by the new rules, requiring much more scrutiny than remortgaging before the MMR.
“But secondly there is a slightly more persistent trend; most mortgage rates are now about as low as they will feasibly get, and the monthly gain from moving to a cheaper deal has already been pocketed for an increasing proportion of households.”
Connells statistics came after the Council of Mortgage Lenders reported most types of mortgage lending recorded a rise in March ahead of the introduction of the Mortgage Market Review requirements.
CML data released last week (15 May) revealed the total number of new loans to home-owners for house purchase increased 4 per cent in March compared with the previous month and was 17 per cent up on March 2013.
