The implementation of the new Mortgage Market Review (MMR) regulations from April this year will change the market, subduing any great growth in the mortgage and lending sector, the latest report from the Council of Mortgage (CML) has claimed, despite a large improvement in the economic conditions of the country as a whole.
According to the predictions from the body, mortgage lending will see a slight improvement throughout 2014, rising to GBP 195 billion, before it rises again in 2015 to a level of GBP 206 billion. These increases will be facilitated by the fact more people now have jobs and a much more stable financial situation at the moment.
Credit availability and the fact that the government has been looking to help people get themselves a footing on the housing ladder has also been earmarked as a reason to be positive. It is thought that the second phase of Help to Buy, initiated in October 2013, will be the main driver behind a growing level of mortgage lending in 2014. "This predicted upward trend is what we expect and hope for and there is little sign of an unbridled housing boom at this stage," said CML director general Paul Smee.
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However, the new rules to be brought in as a result of the Mortgage Market Review in April will also mean that the potential for growth in mortgage lending will be somewhat uncertain and subdued. "This will be supported by the financial policy committee which has been clear it will monitor the market closely and take action if they see stability threatened. This new age of regulation will leave a lasting mark on the mortgage industry. Most likely it will help keep the market from overheating," Mr Smee continued.
Under the new rules coming in April, lenders will be required to carry out far more extensive checks to make sure if people are able to afford to borrow money to buy a home. It is designed to see an end to the sort of speculative lending that led to the property bubble in the UK in 2008.
- Friday 24 January 2014