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New mortgage rules have yet to impact approvals, says expert


Siobhan McAleer, founder of The Mortgage Shop

Siobhan McAleer, founder of The Mortgage Shop

Siobhan McAleer, founder of The Mortgage Shop

Strict new mortgage lending rules introduced at the end of April are not impacting too heavily on approvals being granted by banks here, according to a Northern Ireland broker. Siobhan McAleer, founder of The Mortgage Shop which has 16 branches here, was speaking after it emerged that overall UK mortgage approvals fell back for the fourth month in a row in May.

The number of mortgage approvals given the green light both for house purchase and for homeowners looking to remortgage has fallen every month since February, figures released by the British Bankers' Association (BBA) show.

The BBA said it was "significant" that these are the first figures seen since the introduction of toughened mortgage lending rules under the Mortgage Market Review (MMR) at the end of April.

The rules, which apply both to home buyers and people looking to remortgage, mean lenders have to probe mortgage applicants more thoroughly about their spending habits and apply "stress tests" to ensure people would still be able comfortably to afford repayments when interest rates rise.

House values in the most affluent parts of the UK have resulted in a 7% property price rise in the UK – 17% in London alone – while Northern Ireland has had a 0.3% rise and Scotland 0.8%, according to the latest figures from the Office of National Statistics.

Ms McAleer said that Northern Ireland lenders were already operating under strict rules.

"Since the housing market bubble and crash, lenders here have been a lot more vigilant and had already applied stringent criteria," she said.

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"Therefore the MMR rules are having much less of an impact in Northern Ireland.

"We are seeing a healthier picture in Northern Ireland, with a lot of investment from first-time buyers.

"The biggest threat is a lack of stock. Developers need to get building, planners need to get moving a bit faster, and everything has to ramp up in terms of speed."

While the figures have not been broken down by region, the BBA has said that it will announce regional snapshots, including Northern Ireland, in a few weeks' time. The figures also show a plunge in people ploughing savings into Isas compared with a year ago.

From next week, savers will feel the benefits of being able to put more of their cash away tax-free, with the creation of a new "super-Isa".

The BBA's figures were released amid expectations that further steps could be taken by the Bank of England tomorrow to calm the housing market.

Despite signs that the market is now starting to cool down, some sharp house price rises in recent months have prompted concern.

A Bank of England report released yesterday found that lenders expect the rate of household loan approvals to fall significantly in the third quarter.

The BBA's report said £8.4bn was spent on credit cards in May, marking a 6.8% increase on last year as "higher loan demand continues to reflect rising confidence and an improving economy".

Meanwhile, net lending to non-financial companies increased by £990m in May, marking the first rise since September 2013.