Mortgage approvals rose in January for the first time since June, according to the British Bankers’ Association, but were still 20 per cent down on a year ago.
This illustrates the slowdown in the housing market in the second half of 2014. Yet lenders are still keen to do plenty of lending so expect mortgage rates to continue to be extremely low, despite Swap rates starting to rise.
While mortgage pricing is cheap and lenders continue to compete on rate, an unwelcome development over the past few weeks has been the introduction of loan-to-income caps by several banks, with TSB the latest to restrict borrowing to 4.5 times income – down from 5 times – from today. LTI caps are a very blunt tool; the introduction of the mortgage market review and closer attention paid to affordability was supposed to be a more refined model for assessing how much someone can borrow.