Lending to borrowers with mortgage deposits of 15 per cent and below saw a rebounce in April 2015, according to the latest Mortgage Monitor from chartered surveyor E.surv.
There were 10,112 home purchase approvals for low-deposit borrowers who usually are first-time buyers. This accounts for around one sixth of the total number of approvals in April (62,035).
Both the number of approvals of low-deposit loans (6.4 per cent) and the overall number of mortgage approvals (1.1 per cent) were higher than a month ago. However, while the total number of approvals fell 1.9 per cent compared to the previous year, the number of low-deposit loan approvals was 7.3 per cent higher than in April 2014.
The share of higher loan-to-value (LTV) lending, or the mortgages advanced to people with smaller deposits, in total approvals has now climbed to 16.3 per cent, from 15.5 per cent in March and 14.9 per cent in April last year.
Commenting on this growth trend, Richard Sexton, director of e.surv chartered surveyors, said:
“This revival of the bottom of the market is becoming ever more crucial – and this showed in the recent election struggle, with all the main parties placing helping first-time-buyers as one of the crucial components of their campaigns.
“However, before concerns are raised regarding the increase in higher LTV lending, it’s worth putting these numbers in context. The number of higher LTV house purchase approvals is still only a quarter of what it was in 2007. This is a healthy upturn in higher LTV lending, not a symptom of any malady in the mortgage market.
“David Cameron has outlined a plan to provide 200,000 cut-price starter homes, alongside a commitment to unlocking brownfield land for building new homes. This is the kind of clear planning the property market needs – it is to be hoped that the proposals crystallise into real policies.”
Regional comparison: Most low-deposit approvals in Yorkshire and the North West
The proportion of higher LTV lending has either increased or remained stable in most UK regions in April.
However, approvals of small-deposit loans were particularly high in the North West, with their share in total approvals rising to 24 per cent in April from 21 per cent in March. The region ranks second after Yorkshire, where the share of higher LTV lending stood at 25 per cent last month.
| Region | Proportion of higher LTV loans(April 2015) | Proportion of higher LTV loans(March 2015) |
| Yorkshire | 25% | 25% |
| Northwest | 24% | 21% |
| Midlands | 20% | 20% |
| Northern Ireland | 19% | 22% |
| Eastern | 17% | 16% |
| UK Average | 17% | 17% |
| South/South Wales | 15% | 15% |
| Scotland | 12% | 16% |
| South East | 12% | 11% |
| London | 7% | 6% |
