The Mortgage Market Review came into force on 26th April 2014, exactly a year ago this Sunday. reallymoving.com has analysed the impact on its customers.
Since 2007 there has been a steady increase in downsizing (defined as moves where people are paying less for the home they’re buying than the one they’re selling) from around 25% to over 35% in mid-2014, although it has since fallen back a little to around 32%.
It appears this may have been prompted or exacerbated by the difficulties people had finding mortgages following the launch of MMR. The proportion of purchases that were not backed by a mortgage increased noticeably (from around 21% to 25% during the first half of 2014), perhaps as more parents downsized to free up equity to buy a home for their children?
The reduction in downsizing is not consistent across the UK, however. In Wales so far this year, 44% of moves were downsizing, compared to a national average of 31%. Downsizing was also high in the South West and East of England, both at 39%.
Rob Houghton, Director of reallymoving.com commented: “Although we were interested to see this evidence of the initial impact of the MMR, it has clear that the market has quickly adapted. The strong performance in total mortgage lending we saw in mid-late 2014 and steady volumes of total property transactions in 2014 suggests there wasn’t a dramatic impact on overall market activity as a result. The 35% of movers that are downsizing represents a significant part of the property market, keeping the property market active by allowing people to release equity on their property, helping their children get onto the property ladder as first time buyers or releasing funds for retirement.”
