UK mortgage approvals fall to 11-month low, says Bank of England

Banks sanctioned the lowest number of mortgage approvals in May since June 2013, according to the latest Bank of England disclosure about the housing market. 
This suggests that the tighter affordability rules, introduced by the Bank of England in April, combined with pending interest rate rises, are cooling transaction levels in the housing market. 
New data released by the Bank of England this morning show that Mortgage approvals for prospective home buyers amounted to 61,707 in May, down from 62,806 in April, representing an 11 month low. This adds further weight to the figures gathered from the British Bankers Association, reported last week by, which showed the lowest number of approvals since August, 2013.
This downward trajectory in mortgage approvals is a welcome change from the blooming upward trajectory that lending was going in earlier this year. Mortgage lending rose by a stupefying 1.9bn in May, its biggest upsurge since July 2008. 
Moreover, in the 3 months leading up to May mortgage lending rose at an annualised rate of 1.7%, its fastest growth rate since September 2008. This data goes a long way to explaining hyperactive house price rises over the last twelve months.
The escalating nature of this lending led to calls for mortgage approvals to be addressed and with April came the implementation of the Bank of Englandís flagship Mortgage Market Review (MMR). This measure has aided correction of the over lenient mortgage approval practices in place by making lenders face tougher constrictions and subsequent sanctions over risky home loans.
Following much cautionary counsel over the harmful influence of the housing market on the UKís economic recovery, the BoE finally announced plans last week which seek to combat rising debt. These plans are concerned with allowing wage growth to catch up with house prices.
Governor of the BoE, Mark Carney, has attempted to stifle lending by introducing new rules which only allow 15% of mortgage lending for loans worth over 4.5 times the borrowerís income, thus deterring lenders from risky home loans and preventing many from spiralling into further debt. 
The move has been praised by Ian Springett, chief executive of the Agentsí Mutual, who mused:
ìMy view of banks in general is that they act in herds - and their approach to marketing loans has always been a race to relax credit standards to gain market. Then there is a bust and they all retrench and lick their wounds.î
"The Governor's initiative on loan-value (better still loan to income) would have the effect of, to a degree, fixing the credit risk and making them compete around price and service. It also protects consumers from taking on debts they cannot afford - especially if interest rates rise."
The general consensus is Carneyís restrictions coupled with the Mortgage Market Review have gone some way to dampening the housing market, however more action is needed to comprehensively address the issue.