The new mortgage affordability rules that came into force on 26 April have already had an effect on the housing market, according to one chartered surveyors company.
Connells Survey & Valuation found that the total number of property valuations for all purposes fell by nine per cent between February and March, leaving it at 10 per cent lower than March last year.
John Bagshaw, Corporate Services Director at Connells Survey & Valuation, said: “March is usually a strong month for valuations, as the spring property market begins to heat up. But that just doesn’t apply this year. Lenders have had to devote serious time and resources, gearing up for a radically different way of assessing mortgage applications. This has rapidly fed through into the valuations industry, resulting in a sharp dip in the number of completed valuations."
However, Bagshaw added that this dip in valuations is just a “hiccup” and that there is still a significant backlog of demand in all sections of the property market.
The study also found that valuations for home owners looking to move only saw a slight dip of 2 per cent in activity from February to March, leaving home mover activity just six per cent lower than in March last year.
First time buyer activity fell faster compared to February and was down by seven per cent month-on-month, equivalent to an 11 per cent fall in new buyer valuations since last March.
Bagshaw commented: “The picture remains extremely optimistic for the rest of 2014. In fact ensuring that progress is made on an affordable and sustainable basis is vital. MMR can be seen as a necessary step towards a property ladder that’s reliable at every step.”
House purchase activity for new buyers and established homeowners both made up 31 per cent of all valuations activity in March, which is broadly the same as in February.
Remortgage activity, however, was found to have dropped off rapidly, from 35 per cent of all valuations in February to just 23 per cent of activity in March.
Connels put this down to a much sharper drop off in remortgaging in absolute terms, with the number of valuations for remortgaging falling by 22 per cent between February and March, 16 per cent lower than in the same period last year.
The findings also showed that buy to let was the only sector to see more valuations in March than April, up 2 per cent month-on-month, however it still remains seven per cent lower than the same period last year.