The UK housing market recently passed through a correction as growth was subdued during the month of June compared with growth during the month of May.  Many close to the housing market are pointing directly at the new lending rules as the main reason for the slowdown.  Gross mortgage lending increased almost 5% in June to £17.5bn.

Year on year growth painted an even more eye-opening picture however.  Year on year growth was less than 50% of what it was during the month of April.  The massive cooling off has been debated, but largely blamed on new lending rules which are still being adjusted to.

Bob Pannell, the chief economist of CMR, commented on the lending outlook which is taking shape, saying: "The macro-prudential interventions announced by the Financial Policy Committee in late June are finely calibrated and precautionary, but could nevertheless reinforce April’s Mortgage Market Review in tipping the UK towards a more conservative lending environment.

"It is difficult to gauge the short-term direction for house purchase activity and mortgage lending more generally, given unknown regulatory impacts and uncertainty as to when the first in a series of interest rate increases will take place.”

The subject of whether or not the cool down will last is under much debate.  Those close to the UK housing market are taking both sides on the issue.

Matthew Pointon, economist at Capital Economics discussed a possible factor leading to a cool off, saying: “Another factor was that we had this surge of pent up demand over this year as five years’ worth of first time buyers tried to get into the market at the same time.”