MMR looks to have been a gentle dampener - not a hard brake - on the market
Published: 12 August 2014 | Author: Bernard Clarke
For the second month since the introduction of new mortgage rules, our data shows activity levels that are broadly similar to conditions that existed before the mortgage market review (MMR). As a result, we are now confident that the MMR will act as only a gentle dampener – and not a hard brake – on the market.
As our recently published revised market forecasts showed, we expect lending levels to increase modestly over the course of this year. Our most recent breakdown of data shows that it is lending for house purchase – and in particular activity by first-time buyers – that continues to drive the market.
The figures show that 28,600 first-time buyers took out a mortgage in June – 7% more than in May, and 19% more than in the same month last year. By value, lending growth was even stronger – up 11% on the preceding month and 27% year-on-year.
Lending to movers also grew, but more slowly. In June, these borrowers took out 31,900 loans, 4% up on the previous month and 11% more than in the same month last year.
By contrast, remortgaging activity remains muted. The number of loans for this purpose rose by 1% in June, but was 8% lower than a year earlier. Those remortgaging are, however, taking out larger loans on average. At £3.7 billion, the amount advanced for remortgaging was 6% higher than in both the preceding month and a year earlier.
Buy-to-let lending grew 5% in June, to £2.2 billion, although the number of loans was the same as in the preceding month, at 15,600. Buy-to-let lending grew strongly year-on-year, however – up 23% by volume and 38% by value.