BoE: Mortgage availability increased in Q4 2013
In its latest Credit Conditions survey, the Bank said that an increase in availability was reported for borrowers with LTV ratios above 75% and that there was an ‘increased willingness’ to lend at LTV rations above 90%.
It said this was the result of lenders competing for market share, being more confident in house prices continuing to rise and having an ‘increased appetite for risk’.
Lenders are also being less strict about who they lend to.
“Consistent with an increased risk appetite, credit scoring criteria were loosened and the proportion of loan applications being approved increased significantly,” it said.
The Bank also expects a “significant” increase in the supply of mortgages in 2014, including for those borrowers wanting to borrow more than 90% LTV.
Commenting, Peter Williams, executive director of IMLA, said: “The Bank’s latest Credit Conditions Survey confirms that 2013 ended on high, with lenders reporting improved availability of funding and continued rising levels of demand for both mortgages and remortgages.
“The government’s ongoing dedication to sparking movement in the property market has noticeably boosted consumer confidence and interest.
“With greater volumes of business being processed and arrears and repossessions continuing to decline, we have every reason to have high hopes for the market this year. The outlook is far stronger that it was twelve months ago and we are in far better condition to handle new regulations in April without impacting growth.
“The lack of housing supply is firmly established in the political headlights and today’s move by the Treasury to free up space for new homes is another encouraging step in the right direction. It’s vital that pressure is relieved and this can only be achieved by building more homes.
“Levels of activity in the mortgage market will continue to climb in the opening months of 2014 as the second phase of Help to Buy boosts growing competition. There are also murmurs regarding a future rise in interest rates – and this will be bound to spur on some potential customers who are sitting on the fence.
“Lenders will remain vigilant to ensure buyers can afford their mortgage payments whatever the future holds.”
Jonathan Harris, director of mortgage broker Anderson Harris, said: ‘More lending is being done at higher loan-to-values which is great news for those with modest deposits who may otherwise have struggled to get a mortgage.
“However, while this will help get the housing market moving with more transactions lower down the ladder, it’s important that borrowers do not overstretch themselves. Lenders may be relaxing credit scoring criteria but just because you can get a mortgage doesn’t mean you necessarily should.
“Borrowers should consider whether they can afford their mortgage if interest rates were to rise. In particular, there are some excellent five-year fixes available which will provide certainty and help with budgeting when interest rates do start moving upwards.
“The Help to Buy scheme has been eagerly embraced by many borrowers already and is set to become increasingly popular this year. But there has also been an increase in high LTV mortgages available outside the scheme, particularly from the smaller building societies, so borrowers should consider all their options and seek independent advice if they are not sure.”