Further evidence of the benefits offered by the Help to Buy scheme has emerged, with a surge in mortgage lending to buyers with low deposits.
According to e.surv’s Mortgage Monitor, lending to borrowers at 85% loan-to-value or above has almost doubled over the past year.
Lending increased by 80% in October on the same month last year, it said, with 9,176 mortgages advanced to buyers with a 15% deposit or lower. This is the highest number in five-and-a-half years.
House purchase mortgage loans rose to 69,000 overall, the monitor showed – 32% higher than October last year.
Figures from the Council of Mortgage Lenders (CML) recently showed that the number of mortgages advanced to first-time buyers reached 23,600 in September – one third higher than the same month last year.
But the Mortgage Monitor reflects a more pointed rise in activity for new buyers. Part of this can be attributed to the Funding for Lending Scheme, launched last year, which has improved the availability and affordability of mortgage loans.
The second phase of the Help to Buy scheme has also proven popular since it was launched last month, supporting over 2,300 successful applications in its opening weeks.
Help to Buy After-Effects
e.surv has also echoed concerns about the detriments caused by the stimulus package, however, suggesting that the number of affordable properties is falling as demand drives up prices in high-demand areas. It said that loans on properties worth up to £125,000 had fallen by 6% in October on the previous month.
Property agents Savills has recently warned that a growing affordability gap in the capital may force businesses out of London, as fewer employees are able to afford suitable accommodation with commuting distance of their workplaces.
Equally, though, there has been plenty of defence for the scheme. Ben Thompson, Managing Director of Legal & General Mortgage Club, said the housing market was "moving at different speeds", adding that "a real need for assistance remains in many regions".
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