Reduction in approvals ‘less dramatic than expected’

There has been a less substantial tightening in the mortgage market than was previously thought, according to the Council of Mortgage Lenders (CML).

In the Bank of England’s report today, the number of approved mortgages was shown to be steady, despite predictions that there would be a significant tightening of the market.

While there has been a slowdown, it is not unusual for the time of year and also reflects a slowdown in funding, explained Sue Anderson, head of member and external relations at the CML.

“To that extent this is pretty good news. It shows that the level of lending is looking as if it is holding up to a greater degree than some of the pessimists have been expecting,” she said.

The Bank of England report showed that net consumer credit in October this year was up on September as well as the average for the preceding six months.

Meanwhile, net credit card lending was up by £0.2 billion, which fell short of the net increase for September.

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Lenders ‘must be responsible’ under code

Under the terms of the Banking Code, lenders must ensure they are extending credit to people in a responsible way.

Adrian Lloyd, spokesperson for the Banking Code, said that lenders are committed to ensuring that people can only borrow money if they are realistically able to repay it.

“What the code actually says is: ‘We will assess whether we feel you will be able to repay the borrowing’,” he said.

“It’s something we do take seriously, ensuring that lenders under our code do dually go through a proper credit assessment and not necessarily get into difficulties.”

Mr Lloyd added that should borrowers find they are struggling with repayments, the code also includes guidance for how lenders should deal with it.

“If things do go wrong and people get into financial difficulties then our code also says quite a lot about how to handle cases of financial difficulties under the general heading that people must be treated sympathetically and positively,” he explained.

According to figures from CreditAction each adult in the UK owes an average of £28,550, including mortgages.

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