If you remember, last month we reported on a decline in mortgage approvals for February as compared to January. It seems as though we may have a trend on our hands, since the market saw another decline in March as well.

Some analysts and experts seem to have been caught out by the slide, despite the fall the previous month as well. March saw 67,135 mortgages approved in total, down 2,457 on February’s figure of 69,592.

Too early to point to the MMR rules as the cause?

The news has been full of reviews, reports and evaluations about the new Mortgage Market Review. This has seen stricter rules brought into place to ensure fewer people can get a mortgage they cannot afford.

While the rules were not ‘live’ during the period from January to March, some experts suspect banks and building societies may have adjusted the process they used to assess people for mortgages even before the rules came in.

It may mean the actual knock on effect caused by the MMR rules going live may not be as severe as it could have been, if banks and building societies were already starting to tighten things up. Conversely it may mean next month will provide an even bigger shock if the figures fall further.

Statistics and figures

The figures make sobering reading. The mortgage lending market is down by 3.6% when compared to last year. Moreover mortgage approvals are now down by 11.9% across the last two months alone.

The highest number of monthly approvals seen was prior to the economic crisis, when they hit 133,000 during November 2003. March’s figure is therefore almost half of the peak seen back then.

No housing bubble to worry about

While the news has been full of stories and articles about the Mortgage Market Review, there has also been a share of stories about the threat of a housing bubble forming.

However the figures given above seem to indicate nothing could be further from the truth. While January’s total mortgage approvals stood at 76,753, they have been dropping ever since. The new mortgage rules would seem highly likely to negate any further rises, at least for a while. One wonders where the market will go from here.

Some have also speculated that a lack of properties available to buy could be partly behind the fall in mortgage approvals. Fewer homes than would be expected are being put on the market, but this could perhaps be partly due to the new mortgage rules coming into play. The rules affect those who are looking to re-mortgage as well, which may be putting some people off applying in the first place.

It may well take a few months for the market to settle down from the current position. Few experts predicted a fall in approvals for March and yet that is exactly what happened. It will be interesting to see whether there is another fall in store for April as well.

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