Mortgage regulation dampens property price inflation
Data from Rightmove found new seller asking prices so far in June have been virtually flat compared to last month, with the MMR said to be responsible for this levelling off.
Rightmove director Miles Shipside said the rules were causing a ‘major headache’ for estate agents as lenders changed criteria and house sales fell through.
“The Bank of England has now reported three consecutive months of falling mortgage approvals and a major factor in this is the clumsy and apparent overzealous implementation of MMR,” he said.
“It is certainly causing a major headache for some estate agents with U-turns by lenders meaning sales falling through and heartache for buyers and sellers who thought they had a deal agreed.”
The firm said while demand traditionally slows as the market reaches the summer months, this year has seen a far sharper slowdown than in previous years. New seller numbers are up 9.6% so far this year compared to the first half of 2013 but the report said some areas of London may now have hit an affordability cap.
Shipside said the MMR had also been culpable for this slowdown, with lenders failing to communicate to consumers what the changes would mean.
“The MMR deadline has occurred at the busiest time of the home-buying year, without a co-ordinated consumer communication plan, and some ill-prepared lenders are struggling with new underwriting rules, shortages of appropriately qualified staff, and the work involved in processing the additional paperwork.
“When they do all get to grips with it, there is the possibility that this will turn out to be more of a temporary lull rather than a major reduction in demand.”