House purchase lending continued to cool in May to hit an 11-month low, despite the media hype about a property bubble.
Home lending has now fallen 19% in the last four months, as demand slows among home movers, according to the latest Mortgage Monitor from e.surv, published today.
Its figures show there were 61,202 house purchase approvals in May, some 3% lower than in April.
That is the lowest number since 59,260 in June 2013.
This follows the fourth consecutive drop in house purchase lending, although first-time buyer lending continues to rise.
There were 14,600 fewer loans in May than in January, a drop of 19%.
Richard Sexton, director of e.surv chartered surveyors, said the mortgage market is undergoing a gentle cooling.
"Uncertainty is one factor affecting home movers. Some buyers are waiting to see if the market will begin to plateau before agreeing to pay the high price tag on new property.
"And that's before adding in other moving expenses such as stamp duty."
The Mortgage Market Review (MMR) originally triggered the slowdown, Sexton said. "It took time to integrate the rigorous financial tests into the mortgage application process, and to train staff in the new procedures.
"But as MMR becomes further bedded down into the lending process, it is having less of an impact.
"The continued slowdown comes off the back of falling demand among buyers further up the ladder, some of whom now see the home-buying process as too costly.
"This is not a cause for concern and the figures do not support recent media hype regarding a property bubble."
First-time buyer lending continued to pick up pace, despite the overall decline in house purchase approvals.
There were 9,670 loans to borrowers with a deposit worth 15% or less of the total value of their property in May 2014, up 3% on April and 40% higher year-on-year.
Sexton said: "Despite MMR, home loans are still accessible to first-time buyers.
"Demand isn't letting up at the bottom of the market, as first-time buyers still have an unwavering appetite to own their own property.
"But the wind may be changing in the mortgage market.
"Last week, RBS became the second lender to impose additional restrictions on high LTV mortgages, which are typically the mainstay of first-time buyers."
Comments