MortgagesMay 21 2014

CML: MMR has made it harder to interpret data

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There may be some disruption to the monthly pattern of mortgage activity while the Mortgage Market Review (MMR) procedures bed down, the Council of Mortgage Lenders has warned.

CML reported gross mortgage lending in April was 8 per cent more than in March and 36 per cent up on April last year (£12.2bn). Mortgage lending was at it’s highest for an April since 2008 (£25.7bn).

However, Bob Pannell, chief economist of the CML, said the data might be skewed by the implementation of the MMR and changes to lending activities both immediately before and after the rules came into effect.

He said: “As we have pointed out previously, there may be some disruption to the monthly pattern of activity while MMR procedures bed down.”

CML data published earlier this month revealed most types of mortgage lending recorded a rise in the number of loans issued in March ahead of the introduction of tough new affordability checks as part of the MMR.

Total new loans to home-owners increased 4 per cent in March compared with the previous month and was 17 per cent up on March 2013.

The CML’s comments came as 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 morning (21 May) it was announced that Lloyds Banking Group has launched a crackdown on high value mortgage lending by applying a strict four times income multiple on Londoners applying for a mortgage over £500,000.

Mr Pannell said: “The Bank of England has signalled that macro-prudential measures to limit the housing market upturn are likely in the near future, and possibly in the very near future.

“Forthcoming measures will, in our estimation, be careful, calibrated, and proportionate, and designed to reinforce prudent affordability checks, rather than to apply the brakes to the housing market in a more dramatic fashion.”