MortgagesJan 16 2015

BoE data hints at slowdown in house purchase – MAB

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BoE data hints at slowdown in house purchase – MAB

Tough regulations introduced in 2014 should curb excesses in the housing market, but lenders must be prepared to improve their ranges, Brian Murphy has warned.

The head of lending for national firm Mortgage Advice Bureau pointed to latest figures from the Bank of England which showed that while unsecured lending had risen, demand for secured lending for house purchases was reported to have decreased significantly in 2014 Q4.

The 15-page BoE Credit Conditions report said this decrease was in stark contrast with lenders’ expectations of a rise, although it added: “Lenders expected demand to increase slightly over the next three months”.

However, Mr Murphy said: “Lenders predict that demand will rise again for mortgage finance in 2015, but improving access to the housing market for first-time buyers remains a key focus.”

He added that it was worrying that at the tail end of 2014, lenders became less willing to lend at loan-to-value ratios above 90 per cent.

This came a week after the Land Registry data showed that the average property price in England and Wales last year stood at £176,581, compared with £164,921 at the end of 2013.

The Land Registry also noted a slight decrease in average house prices, down 0.1 per cent between October and November, with homes in the East of England recording the greatest monthly price fall, of 1.4 per cent.

Average property price changes from 2013 to 2014

Type 2014 2013 % change

Detached£276,912£259,994+6.5%
Semi-detached£168,295£155,953+7.9%
Terraced£132,740£124,864+6.3%
Flat/maisonette£168,515£156,204+7.9%
All£176,581£164,921+7.1%

Source: Land Registry

Adviser view

Mark Harris, chief executive of London-based SPF Private Clients, said: “There is growing evidence of a slowdown in the housing market, with tougher criteria as a result of the mortgage market review now really having an impact.”