Loan approvals fell for the fourth month in a row in October, Bank of England figures show.
According to the latest Bank of England Money & Credit Statistics, the number of loan approvals for house purchase was 59,426 in October, compared to the average of 63,727 over the previous six months.
Richard Sexton, director of e.surv chartered surveyors, says slow wage growth and low interest rates have made it harder to save for big deposits, and while Help to Buy had improved the situation, the new loan-to-income caps are reversing that trend.
“The increasingly rigorous testing may have seemed daunting to prospective homeowners – a negative image has likely had a dampening effect on the real positive influence of [the Mortgage Market Review] and Help-to-Buy. In addition, those who have seen regulation for the vital tool it is have started to buy up the existing stock of starter homes.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), says that the overall forecast is still good despite the dampening effect of regulation.
“Current homeowners have been spurred into action by their recent equity gains, with the number of remortgage approvals up 2 per cent since September. Rising house prices mean that many are now better placed to access improved mortgage deals. Meanwhile, all buyers can take advantage of the continuing price war among lenders.”
He adds: “Lenders have maintained a strong appetite for business, and current lending conditions are set to bolster consumer demand even further. However, the key focus of affordability remains, and lenders must ensure they continue to put their full weight behind financial assistance schemes such as Help to Buy and higher loan-to-value (LTV) lending.”
