House purchase approvals fell to 60,280 in March, down 2.4 per cent compared to February as buyers, especially those looking to purchase their first home, are getting more cautious ahead of the election.
Compared to March of last year, approvals declined by 10 per cent, according to the latest Mortgage Monitor from chartered surveyor e.surv. This is, however, the smallest annual fall seen for half a year.
Approvals of higher loan-to-value (LTV) mortgages dropped by 10.5 per cent from February to March as first-time buyers hold off their purchases in the run-up to the General Election.
Smaller-deposit borrowers have also dropped back as a proportion of all house purchase approvals, representing just 15.5 per cent of borrowers in March, compared to 16.9 per cent in February.
The most recent Credit Conditions Survey from the Bank of England stated that the supply of loans for house purchase increased in the first quarter of the year, but demand decreased in the same period.
Richard Sexton, director of e.surv chartered surveyors, comments: “Smaller deposit borrowers, typically first-time buyers, are among the most cautious borrowers. Picture yourself buying a home for the first time – investing a carefully husbanded nest-egg into a property you want to enjoy and likely resell at some point in the future. It’s understandable that they might want to wait for the dust to settle after the election before they make the leap.
“Higher LTV loans are still available to borrowers who want them. The Help to Buy scheme expanded in March to include a new ISA available exclusively to first-time buyers, helping them to build that all-important deposit. With the price war between banks producing attractive fixed rate deals, it’s an excellent time to be a first-time buyer.
“While these pre-election cold feet may prove to be temporary, the underlying problem of the housing shortage still needs to be addressed. Attractive deals and rewarding schemes can only carry the market so far: more homes need to be built for borrowing to flourish.”
