E.surv’s Mortgage Monitor revealed that 13,000 fewer home loans were approved in April than in January when there were 76,251. Between March and April approvals fell by 6%.
Richard Sexton, director of e.surv chartered surveyors, said: “The new MMR regulations introduced last month 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”
House purchase approvals were 15% higher in April compared to the same month last year but the recent monthly falls are stalling the recovery of the mortgage market.
Sexton said the added pressure on banks to build up their capital reserves will also impact on the pace of mortgage lending.
He said: “The Bank of England are increasing stress testing for 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.”
High loan-to-value mortgage deals have continued to perform well allowing first-time buyers with small deposits greater access to the property market.
Loans to borrowers with a deposit of 15% or less increased by 48% year-on-year to 9,412.
The number of first-time buyers reached a pre-recession high in March, according to the latest First-Time Buyer Tracker from LSL Property Services.
There were 31,400 first-time buyer sales in March, the highest since August 2007, as the average first-time buyer deposit fell 10% in a year.
But Sexton said the lack of homes coming to the market was holding back lending and creating a shortage of choice for prospective buyers.
