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Mortgage Approvals Fall In April

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Seasonally adjusted mortgage approvals for house purchase fell to 62,918 in April from a downwardly revised 66,563 in March.

SA approvals peaked in January at 75,838, 42% up on January 2013's figure of 53,447. April 2014 was still 14% up on the same month last year, but since approvals were rising throughout 2013 and are now falling, the year-on-year gap is narrowing rapidly.

Despite the overall fall, specialist lenders saw a significant 13% rise in approvals.

MortApprovals_0414.gif

http://www.bankofengland.co.uk/statistics/documents/mc/2014/apr/moneyandcredit.pdf

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Seasonally adjusted mortgage approvals for house purchase fell to 62,918 in April from a downwardly revised 66,563 in March.

SA approvals peaked in January at 75,838, 42% up on January 2013's figure of 53,447. April 2014 was still 14% up on the same month last year, but since approvals were rising throughout 2013 and are now falling, the year-on-year gap is narrowing rapidly.

Despite the overall fall, specialist lenders saw a significant 13% rise in approvals.

MortApprovals_0414.gif

http://www.bankofengland.co.uk/statistics/documents/mc/2014/apr/moneyandcredit.pdf

'Specialist Lenders' ? What sort of category of borrower would that cover then?

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'Specialist Lenders' ? What sort of category of borrower would that cover then?

It's difficult to say - it might be increased borrowing for BTL, but also it may be prospective owner occupiers seeking alternative sources of finance now that the major institutions are being so strict with the new MMR regulations.

A number of mortgage brokers have indicated that certain lenders are applying the new MMR affordability criteria with less vigour than the main high street lenders.

For perspective, the BoE's 'other specialist lenders' category accounted for 4,923 of the 62,918 approvals for house purchase.

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It's difficult to say - it might be increased borrowing for BTL, but also it may be prospective owner occupiers seeking alternative sources of finance now that the major institutions are being so strict with the new MMR regulations.

A number of mortgage brokers have indicated that certain lenders are applying the new MMR affordability criteria with less vigour than the main high street lenders.

For perspective, the BoE's 'other specialist lenders' category accounted for 4,923 of the 62,918 approvals for house purchase.

and how do those figures (as a percentage of total) compare with historical data? is this a surge or just normal?

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and how do those figures (as a percentage of total) compare with historical data? is this a surge or just normal?

In historical terms it's little more than a blip - back in Oct 2006 for example these other specialist lenders accounted for 24% of approvals for house purchase - over 30,000 in a single month.

When the crunch hit their lending collapsed, reaching a low of just 814 approvals in Oct 2008.

In April last year they approved 3,576 loans, 6.5% of the total against 7.8% in April this year. So it may not be significant - but it will be something to keep an eye on over the next few months.

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Bank of England data released today also shows average fixed mortgage rates rising in April.

2-yr 75% LTV rose from 2.37% in March to 2.54% in April (Jan 2.37%).

5-yr 75% LTV rose from 3.48% to 3.69% (Jan 3.34%).

MortRates0414.gif

Other fixed rates:

2-yr 90% LTV: 4.38% to 4.48% (Jan 4.34%).
2-yr 95% LTV: 5.06% to 5.14% (Jan 5.05%).
5-yr 95% LTV: 5.46% to 5.55% (Jan 5.44%).

Edit: fixed dates

Edited by FreeTrader

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Talking with some EAs last week they were totally unaware of the likes of Lloyds and others limiting mortgage salary multiples - so I suspect that we will just have many, many months of denial now with silly asking prices.

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Must be dwindling surely? God help anyone who has "bought" in London recently.

Where there is a buyer there is a seller. If people are getting equity realised in London, it gives them wads of cash for a move or BTL portfolio in the regions

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How many cash buyers these days?

40-45K of the 104K residential transactions in April would have been cash buyers.

This is of course being driven by very low returns on holding cash. The BoE data show household deposit rates still falling in April (i.e. lenders are currently increasing their margins, as Nationwide noted in its results presentation last week):

DepositRates0414.gif

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40-45K of the 104K residential transactions in April would have been cash buyers.

This is of course being driven by very low returns on holding cash. The BoE data show household deposit rates still falling in April (i.e. lenders are currently increasing their margins, as Nationwide noted in its results presentation last week):

So 38% to 43% are cash sales but any rise will be partly driven by prices rising. Which is driven by people borrowing too much again as we are back into much higher joint income multiples. By Nov last year 12% of mortgages were over 4 times income and 18% were over 5 times income. Income is whatever is put on the mortgage application so lots will be joint income. Which is the thing that disguises how affordability has really changed, when banks say prices are 3 to 4 times income but people wonder why they are 6, 8, 10 times main income.

http://www.edmundconway.com/wp-content/uploads/2013/11/highloantoincomes.jpg

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40-45K of the 104K residential transactions in April would have been cash buyers.

Is there any way to estimate how much of this is just churn? Sell a property, and downsize/buy an equivalent for cash -> No new cash into the property market from savings/investments.

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