Mortgage lending at 85% loan-to-value or above has risen to a four-and-a-half year high, providing more optimism that new stimulatory measures are benefitting first-time buyers.
According to the latest Mortgage Monitor from e.surv, over 7,000 mortgages were approved in June for borrowers with a deposit of 15% or lower.
This represents a considerable rise of 47% on June last year, and the highest level since September 2008.
The rise was indicative of stronger performance across the market. Around 58,000 mortgages were approved last month, e.surv’s monitor said – an increase of 23% from the previous year.
Higher LTV Lending in Recent Months
The figures support those from the Council of Mortgage Lenders (CML), which found a 42% increase in the number of loans advanced to first-time buyers in May from the previous year.
The CML said it had observed an increase in the number of first-time buyers entering the market with smaller deposits over the last few months.
The average first-time buyer loan-to-value ratio rose to 83% in May, it said – the highest ratio since November 2008.
First-time buyers are also borrowing more, taking out an average of £113,400 in May compared with £105,000 during the same month last year.
The age of the typical first-time buyer remained at 29, it added.
Lenders Easing Conditions
Chartered surveyors e.surv said that a significant and sustained improvement to higher LTV mortgages, aided by schemes such as Funding for Lending and Help to Buy, had improved conditions for first-time buyers.
"Last year the lending market was thorny for first-time buyers," explained e.surv director Richard Sexton.
"Banks eyed them with caution. Property prices need only fall a little before a high LTV borrower falls into negative equity, and the bank stands to lose.
"But over the last year, lenders have softened the process for them to get a house purchase loan," he said.
Keith McDonald
Which4U Editor
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