E.surv reports rise in mortgage approvals
Approvals climbed from 55,785 in December to 65,184 in January and increased by 13% on January 2012 which e.surv said was driven by high LTV borrowers and first-time buyers.
Richard Sexton, business development director of e.surv chartered surveyors, said: “These are the most encouraging signs for the mortgage market since the financial crisis.
“After an inauspicious start last autumn Funding for Lending has come good, flooding lenders’ balance sheets with cheaper funds which has encouraged them to reduce mortgage rates to record lows and roll out a much wider range of mortgages for high loan-to-value borrowers.”
Lending to borrowers with a deposit of less than 15% increased by 30% between December and January reflecting a significant improvement in the availability and affordability of first-time buyer loans.One in eight of all house purchase loans in January went to high LTV borrowers.
This was the highest proportion since February last year when first-time buyer numbers were artificially due to the rush to beat the stamp duty deadline.
There were 7,758 loans to borrowers with a deposit of 15% or lower in January, the highest number since February 2008.
Lending to high LTV borrowers has been on a broadly upward trajectory since 2011 whereby throughout 2011, there was an average of just 4,808 high LTV loans per month. In 2012 that increased 13% to 5,325.
And January saw an even greater rise of 30%, suggesting this year will see further improvements in conditions for first-time buyers.
Over the winter a number of major lenders launched their cheapest ever fixed rate mortgages which quashed mortgage rates on 2-year fixed deals down from 4.44% to 3.92%.
The cheaper funds delivered to lenders by the Funding for Lending Scheme was the root cause of the improvement in lending conditions. Since the launch of the initiative lenders have introduced more than 300 new house purchase mortgages.
Sexton said the hope now is that January isn’t just a “flash in the pan”.
He said: “Borrower finances are better and the Eurozone crisis lies dormant which all bodes well for the rest of the year. Lenders are more confident and have been emboldened by Funding for Lending and by the relaxation of the speed at which they have to construct capital buffers.”
Sexton added: “Much will hinge on the economy. If it slides into a triple dip recession lots of the confidence which has been built up over the last few months will evaporate and the recovery will go up in smoke.
“There are also concerns over the government’s plan to electrify the ring fence between retail and investment banking. The voltage from this could shock lenders into focusing their efforts on restructuring their businesses, rather than on where it is needed: on new lending.”