Lenders will squeeze mortgage approvals over the next three months, despite rising demand.
In the sort of news that estate agents do not want to hear, the Bank of England says that lenders are forecasting a “lower appetite for risk”.
As a result, mortgage approvals are set to fall “significantly” in the third quarter.
The Bank’s quarterly credit survey says this is partly due to the Mortgage Market Review (MMR) which has brought in stringent new rules, and partly due to lenders tightening up on high loan to income approvals.
The survey acknowledges that in the second quarter of this year, mortgage approvals increased slightly while demand went up significantly.
It expects demand to rise again over the next three months.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Wider availability of credit is a welcome sign that the mortgage market is returning to normal and it would be a travesty if this overdue pick-up after years of stagnation is quashed by over-eager efforts to keep house prices in check.”
The Bank of England is expected to announce this week whether it will take action to cool the housing market.
Source - Propertywire