Figures from the British Banking Association (BBA) found that while overall mortgage approvals in January were only slightly down on December 2014, they fell significantly compared to 2014.
Remortgaging and other secured approvals were 21% and 25% lower than a year ago respectively, according to the data.
While the mortgage market experienced sluggish growth in the second half of 2014, overall stock is still 1.4% higher than a year ago, the BBA said.
The decision to impose blanket loan-to-income (LTI) caps by a number of lenders with TSB most recently making the move, was “an unwelcome development”, according to Adrian Anderson, director of mortgage broker Anderson Harris.
“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,” he said.
Richard Sexton, director of e.surv chartered surveyors, said buyers were being pulled in “two directions” with record low mortgage rates coupled with minimal inflation and growing wages meaning pay packets were being stretched further.
“Stamp Duty charges have also been slashed for many borrowers. However, these positive economic factors can’t counteract the continued problem of rising prices, and lack of affordable housing stock. Any extra cash potential buyers can save is being swallowed whole by property price increases, meaning support for higher LTV [loan-to-value] borrowers through schemes like Help to Buy is more important than ever.”
