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There has been an increase in the UK to borrowers with smaller home deposits due to increased accessibility in lending and highly attractive mortgage rates, the latest mortgage market report suggests. Loans to borrowers with small deposits, typically first time buyers, saw a year on year increase in April of 7.3% and were up 6.4% month on month, according to the data from e.surv chartered surveyors. However, the number of house purchase approvals fell year on year, suggesting that higher LTV lending is helping to support total mortgage approval figures. In the total market, there were 1.9% fewer approvals for house purchase loans in April than there were last year: 62,035 loans, down from 63,236 in April 2014. As a proportion of total approvals, higher LTV lending now stands at 16.3%, compared to 15.5% in March and 14.9% in April last year. These gains come despite a poor start to the year, the report points out. ‘This revival of the bottom of the market is becoming ever more crucial and this showed in the recent election struggle, with all the main parties placing helping first time-buyers as one of the crucial components of their campaigns,’ said Richard Sexton, director of e.surv. ‘However, before concerns are raised regarding the increase in higher LTV lending, it’s worth putting these numbers in context. The number of higher LTV house purchase approvals is still only a quarter of what it was in 2007. This is a healthy upturn in higher LTV lending, not a symptom of any malady in the mortgage market,’ he explained. ‘Prime Minister David Cameron has outlined a plan to provide 200,000 cut price starter homes, alongside a commitment to unlocking brownfield land for building new homes. This is the kind of clear planning the property market needs and it is to be hoped that the proposals crystallise into real policies,’ he added. The data also shows that on a monthly basis, house purchase approvals increased 1.1% from March, when there were 61,341 house purchase loan approvals. Despite a small month on month drop in March, this is the latest piece of a clear trend of growth stretching back to December last year. Sexton pointed out that in the wake of mortgage reforms a year ago there were five consecutive months of dips. ‘We turned a corner at the start of this year, and lending is starting to find its feet again in the new regulatory landscape. This should be even more of a spur to the government to push forward their plans for home building, as a continual demand for home ownership places ever more pressure on Britain’s insufficient stock of homes,’ he said. The proportion of higher LTV lending has either increased or remained stable in most UK regions in April but Scotland saw just 12% of house purchase approvals for borrowers with smaller deposits in April, compared to 16% in March. At the other end of the spectrum, house… Continue reading →
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