New mortgage rules could ruin property recovery - warning
Published by Max Salsbury for 24dash.com in Housing and also in Finance
mortgageImage: via Shutterstock
Conveyancers are warning that new tougher rules on mortgages could stall growth, after property sales in the UK recorded a six-year high.
Suzanne Marsters, conveyancer and chartered legal executive at North West law firm Maxwell Hodge, said: "We have seen conveyancing work double in the last six months in our region alone which is a direct indicator of the recovering property market. However, the tougher rules being brought in for mortgage applicants could threaten this recovery."
Property sales in the first three months of 2014 have hit a six-year high, with the Royal Institution of Chartered Surveyors reporting recovery on a national scale.
RICS branches of estate agents and valuers in England reported average sales of 23 properties each in the first quarter of the year, up from a low of 12 in 2009.
However, the new Mortgage Market Review Rules will see people face probing questions over their spending habits in one of the biggest ever shake-ups of the mortgage market.
Ms Marsters said: "The MMR rules are in one sense a great initiative because they are about ensuring people taking on mortgages can afford them both now and in the future, however, with the market slowly recovering they could also impact on property growth and the economic benefits that brings.
"The Royal Institution of Chartered Surveyors predicts that UK house prices will rise by six percent for the next five years pushing prices up by 35% by 2020. So we are left with a recipe of a shortage of housing, increasing prices and it being more difficult for buyers to get a mortgage.
"The recovery in the market has been strong in the last few months, but it needs to be to deal with these potential issues and avoid another period of stagnation."