BOE: Banks will improve credit availability

Sam Cordon

October 9, 2013

The survey also found that the number of loans on offer to households increased significantly in the third quarter as record-low interest rates and rising house prices continued to fuel demand for home loans.

Some lenders also said that they expected to make more mortgages available to borrowers with smaller deposits in the fourth quarter in response to the launch of Help to Buy 2.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Today’s Credit Conditions survey is a timely reminder of what Help to Buy 2 can bring to the mortgage market.

“While credit has become widely available above 75% loan to value (LTV) ratios, lenders are still cautious about lending above the 90% mark.

“Recent improvements have been driven by a push for market share rather than greater appetite for risk, so it is clear why the government has moved to boost confidence in this area and put the market on a surer footing.”

Murphy said the lenders that have already signed up to the scheme will have a head start in terms of public awareness of their offer, but these early adopters are sure to be joined by others as the scheme develops.

He said: “It is important not to expect too much too soon: the first products may not ‘wow’ buyers but once lenders have had time to size up the competition, we should see more attractive deals emerging.

“For anyone who can afford repayments on a 95% mortgage, part two of Help to Buy means they can take full ownership of a newly built or existing home with a mortgage from day one, with no need for an equity loan.

“The average LTV for house purchase has been fairly static over the last year but Help to Buy should tip the balance further in buyers’ favour without encouraging irresponsible lending.”

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