House prices shrug off MMR to hit new high
Thu 10 Jul 2014
House prices have seen the highest annual rise in four years as the market shrugs off the impact of the Mortgage Market Review, according to new figures published today. The average house price in England and Wales climbed 23,443 in the past year, a rise of 9.6%, new research from LSL Property Services shows. This falls to 5.2% once you exclude booming London and the South East. London house prices rose 15.6% annually, although prices are falling in Westminster and the City. This follows yesterday's CML figures from showing that house purchase lending rose 9% in May compared to April, by both volume and value. The volume of loans rose 13% year-on-year, while loan values rose 25%. CML director-general Paul Smee said the impact of new Mortgage Market Review has been "subtle rather than dramatic". "First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted. "There was no cliff edge, lenders and intermediaries had been methodically working towards applying MMR changes for months leading up to implementation and the figures appear to reflect this." Mark Dyason, director of broker Edinburgh Mortgage Advice , said the figures show that the MMR "has created a bottleneck rather than set the market back". "Lenders have slowed up slightly as they adjust to the new regime but there has been no underwriting U-turn. "What's happening is that some people aren't getting the size of loan they might have six or 12 months ago. Five times income, for example, might come down to four. "Is this a bad thing? In many cases, probably not. "I expect the market to continue growing at a steady pace from the autumn onwards and into 2015." Jonathan Harris, director of mortgage broker Anderson Harris, warned that using data from May to assess the impact of MMR is "premature". "People are still able to take out new mortgages and to remortgage but it is taking longer and borrowers may find they have to compromise in terms of rates and loan-to-values. "They may not always be able to get the cheapest rate or highest LTV, depending on their particularcircumstances. "The lending market is still robust, however, with lenders keen to lend and pent-up demand for house purchases from first-time buyers and home movers filtering through." Peter Rollings, chief executive of Marsh & Parsons, said another set of new data, from the Royal Institute of Chartered Surveyors, suggests that the pace of house price rises in London is slowing. "For the first time since the recession, national house prices are increasing faster than rates recorded in the capital. "This is proof that the rest of the country is back on track in terms of housing growth and that we're moving into a new stage of the housing recovery. "RICS market data for London reflects our own knowledge into current trends, with demand for property in the capital easing and supply continuing to rise. "As a result we predict a continued slowing down in the rate of price growth and a natural levelling off of the market over the next 12 months, as it returns to a steadier, healthier rate of growth."