Lenders expect the proportion of mortgages approved to fall “significantly” in the third quarter, according to the latest Bank of England credit conditions survey.
The survey says: “Some lenders noted that changes introduced as a result of the MMR might reduce app-roval rates somewhat. In addition, some lenders suggested a tightening in lending standards on large loans with high LTI ratios may also push down their approval rate a little.”
Lloyds Banking Group and Royal Bank of Scotland have already capped LTIs at four times income for loans over £500,000.
Mortgage Advice Bureau head of lending Brian Murphy says: “There is a common consensus that mortgage approval rates are firmly in check as a result of the MMR and we must ensure activity is not dialled down so far that credit worthy borrowers are disadvantaged again.”