The new limits will not apply to Approvals in Principle issued before 31 December

[Brendan Burgess]

From page 24 of the Consultation Document

If a regulated financial service provider has entered into a Mortgage Offer (Sanction in Principle) commitment before the date on which the LTV/LTI limits come into effect, the limits do not apply to that commitment.

This would suggest that anyone thinking of buying a house now who can't get the 20% deposit together, should apply for AIP now. You have nothing to lose.

However, the Consultation Document also says

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While the regulations are not yet in place, regulated lenders are instructed to take account of the likely introduction of such a regime and to begin to adapt their lending practices already in anticipation of its introduction.

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[Brendan Burgess]

This could work very well for people who get approval before 31 December but who buy afterwards.

It is likely that the new measures will take a lot of first time buyers out of the market, so competition for houses should fall in the new year. All other things being equal, prices should fall too.

 

[manticore1]

The Mortgage offer is valid for 6 months only so if you get an approval in December it will expire in June.

It's a very stressful situation for people that bought house off plans in the last couple of weeks. I have signed all the paperwork (contract with the builder and Letter of offer from the bank), couple of weeks ago. The house will not be ready until May/June but the letter of offer expires in April. The bank doesn't know yet if the new limits will apply when we get the letter of offer extended in April.

 

[44brendan]

This is a risk! You should speak with the developer and your solicitor in order to ensure that contracts are exchanged in April rather than facing a contest with the Bank on an expired L/O. I.e. address the issue now rather than crossing your fingers and hoping for the best.