Mortgage Monitor - May 2015

Posted 14/05/2015 by: Reeds Rains

Higher LTV lending supporting the wider mortgage market in April

  • April sees over 10,000 house purchase approvals to higher LTV borrowers, up 7.3% year-on-year
  • Lending to borrowers with small deposits represents 16.3% of house purchase approvals in April, up 1.4 percentage points from 14.9% a year ago
  • Small deposit borrowing concentrated in Yorkshire and North West – a quarter of all loans in Yorkshire were higher LTV

Loans to borrowers with small deposits saw a year-on-year increase in April, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

In April there were 10,112 house purchase loan approvals for borrowers with deposits worth 15% or less of their property’s total value – typically first-time buyers.

This is 7.3% more than April last year, when there were 9,422 approvals, and 6.4% more than the 9,508 borrowers seen in March. 

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 despitea poor start to the year. 

The most recent First Time Buyer Tracker from Reeds Rains found that Q1 2015 was the worst opening quarter for first-time buyers in two years, with just 60,900 transactions recorded. 

Richard Sexton, director of e.surv chartered surveyors, comments: “Borrowers with smaller deposits are making a welcome comeback, thanks to increased accessibility in lending, improving wages and highly attractive mortgage rates.

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.

“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.

“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 – it is to be hoped that the proposals crystallise into real policies.”

Read the full report here