MMR behind approval slowdown
Sexton made his claims following yesterday’s revelations from the Bank of England that mortgage approvals had hit a nine month low.
He said: “The new MMR regulations have temporarily slowed lending in the market. Borrowers must now prove that they can withstand potential interest rate rises up to 7%, as well as answering a host of detailed questions about future finances.
“But the slowdown has also come from the supply side. Lenders have invested time training staff and implementing lengthier advisory meetings, which has capped their capacity to process applications.
“It has led to an interim lending lull. But this is more than made up for by the benefits of the new system: ensuring lending is sustainable and borrowers can afford their repayments even when the base rate begins rising.
“MMR is not the only regulation putting the brakes on lending. The Bank of England are increasing stress testing of the top eight lenders, to make certain they can withstand a 35% fall in house prices – making them more resilient to any future financial problems.
“That means banks will need to build capital buffers, which may result in a further lending slowdown in the short-term.”