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High LTV lending bounces back

Sarah Davidson

March 12, 2015

In February lending above 85% LTV for house purchases made up 16.9% of the market, up from 15.3% in January and 13.9% in December.

Richard Sexton, director of e.surv chartered surveyors, said: “Higher LTV borrowers took a nosedive in October as a proportion of the market, after the introduction of loan-to-income caps became a challenge for first-time buyers.

“But these buyers are evidently returning to the market to take advantage of low mortgage rates and cheaper Stamp Duty charges.

“And after the tricky bedding in phase that accompanied new mortgage legislation, first-time buyers are now once again accessing a market restructured for long-term viability.”

There were 10,300 high LTV loans in February, a 10.7% increase from January’s total of 9,300.

The average first-time buyer purchase price climbed to 160,304 in January, 12% higher from the same month in 2014.

Regionally, high LTV lending as a proportion of the market was the highest in the North West (27%), followed by Yorkshire (26%), Northern Ireland (24%) and the Midlands (22%).

At the other end of the spectrum just 8% of house purchase transactions in London and 11% in the South East were above 85% LTV.

Sexton added: “People with higher LTV loans are typically first-time buyers, looking to make the crucial leap onto that first rung of the property ladder.

“We can see the effects of Help to Buy taking strongest root in the North. It’s a vital scheme to ensure people are able to become homeowners for the first time while savers struggle to put a deposit together against a backdrop of low interest rates.

“It’s clear that these effects aren’t having quite the same impact in the South. The simplest and most effective answer is to build more houses. The shortage of homes is a problem all over the UK but, as the figures show, especially acute in London and the South East.”


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