Average LTVs down in 2012 despite FLS
By Ryan Fowler
In an annual review of its National Mortgage Index, MAB reported that LTVs for purchases and remortgages were down 0.7% and 2% respectively.
Purchase deposits rose further in 2012 than in the previous two years combined, hitting housing affordability. In spite of an 8% increase in purchase applicants’ typical income, there was also a 12% annual rise in the average house purchase price to contend with.
The average purchaser in 2012 put up almost £10,000 more for their deposit than in 2009 and also borrowed more than £32,000 extra as part of their mortgage.
Brian Murphy, head of lending at MAB, said: “Even though the typical purchase income rose annually, finding an additional £10,000 to put down for a deposit is a considerable ask.
“Given that average LTVs for the year actually fell from 2011, the rise in average income may mean people on lower salaries are making fewer house purchases, because asking prices are simply beyond their reach.”
Industry commentators say that it is early days for FLS which was only introduced in August last year.
MAB’s review also shows that over 81% of all purchase applications in 2012, and 86% in the second half of the year, were for fixed rates. The percentage of fixed rate remortgage business also rose in 2012, from 54% to 78%.
The review also reported a 15% drop in the number of intermediary products, from 6,856 down to 5,814. Overall availability fell from 8,781 products to 8,120.
However Murphy is confident about 2013: “Industry figures show that lending to first-time buyers is growing, and as more incentivised funding is drawn down from the Bank of England, we can expect the competition between lenders to fuel increasingly attractive product offerings at both ends of the market.
“It is shaping up to be good time to explore the potential for purchasing or refinancing a property, and brokers’ role in helping consumers review their options will be more important than ever.”