High LTV growth in the North
The North has witnessed the greatest improvement suggesting the recovery in lending is nationwide as 24% of all house purchase loans in July were to high LTV borrowers in the North East and Cumbria, the highest in the UK.
Richard Sexton, director of e.surv chartered surveyors, said: “The north-south divide is finally narrowing. Up until now much of the evidence has pointed in the direction of a mortgage market recovery focussed in the capital and surrounding South East.”
Sexton said the latest research showed that there has been significant improvement in high LTV lending in the North.
He added: “It reflects the fact that it’s getting easier for first-time buyers nationwide to access the mortgages available to them as banks extend more lending to high LTV borrowers across the country.”
The North West and Yorkshire followed close behind with 23% and 20% respectively.
In London and the South East, the focus of the annual increase in lending and the UK region with the highest overall lending, the number of loans approvals to high LTV borrowers remains low.
There were 9,178 loans to borrowers in London in July but less than 3% of these were to high LTV borrowers.
High LTV lending narrowly missed hitting a post financial-crisis record. It was 56% higher than last July with 6,946 loans advanced to borrowers with a deposit of less than 15% during the month compared to just 4,446 loans in July 2012.
There were 56,475 house purchase approvals in July, up 21% from 46,796 in July 2012, making it the strongest July since 2007.
Despite significant house price rises, the sharp improvement in high LTV lending was reflected in the number of loans made on properties up to the value of £125,000 – typical first-time buyer stock. There were 12,989 loans on these properties in July, up 21% from just £10,763 in July 2012.
But on a monthly basis, house purchase lending declined slightly. It fell 2% from June, from 57,667 approvals, suggesting the recovery is beginning to plateau.
Sexton said: “Confidence is seeping back into the mortgage market. House purchase lending remains far-and-away improved compared to last year.
“High LTV borrowers are enjoying more success in qualifying for house purchase loans as banks begin to ease lending criteria, and encourage investment in lower-equity borrowers.”
But he added there was still a long way to go because the mortgage market is being pegged back by weak wage growth and high inflation which is preventing more significant increases in first-time buyer lending.
In July 2007 there were twice as many house purchase loans. Many buyers remain locked in the battle of saving for a deposit as their wages are growing slowly and they losing out in real-terms as inflation remains high.