Bob Pannell, chief economist at the CML, said the figures clearly pointed to a slowdown in activity levels, “in part” associated with the new MMR rules.
He said it was unclear how long the slowdown would last, adding: “Implementation of the new regulatory regime is likely to have disrupted the normal patterns of activity, creating statistical fog around the published figures.
“As this lifts over the coming months, a clearer picture as to any lasting impact of the MMR rules on lending activity should emerge.”
The latest CML statistics follow warnings from the Bank of England that it will step in if the MMR fails to halt house price inflation. Governor Mark Carney has also indicated that interest rates will increase sooner than originally suggested.
Henry Woodcock, principal mortgage consultant at London-based Iress, said the mortgage market had clearly undergone a cooling-off period following implementation of the MMR. He said: “The combination of more stringent affordability checking and a far longer application process, not to mention more complex administration for lenders and brokers alike, is pulling the rug from under the resurgent mortgage market.
“As we head into the typically slower summer months, and buyers and lenders adjust to the new regulatory environment, we are not going to see lending hit the levels seen earlier in the year. But that is not to say things will come to a standstill.
“There is still strong pent-up demand, and many prospective borrowers are looking to move before the Bank of England acts to hike rates from historic lows. On top of this, buy-to-let lending continues to grow and will act as an increasingly important driver for overall lending.”
Adviser view
Mark Harris, chief executive of London-based mortgage broker SPF Private Clients, said the threat of an interest rate rise was bound to affect people’s inclination to take on new debt. He said: “While it still looks as though the first rate rise won’t come before the middle of next year at the earliest, fixed-rate mortgages are becoming more expensive and will continue to do so. However, borrowers shouldn’t panic as five-year fixes are still available for a little over 3 per cent – historically an excellent rate.”
