High LTV lending continued to drive the market forward in July, according to the UK’s largest chartered surveyor.
There were 11,533 loans to borrowers with a deposit worth 15 per cent or less of the total value of their property, 52.1 per cent more than a year before, e.surv’s Mortgage Monitor shows.
High LTV loans accounted for 1 in 5 house purchase approvals in July 2014, compared to 1 in 9 in July 2013.
And the average loan-to-value ratio was 62.6 per cent – compared to 60.6 per cent a year ago.
However increased willingness among banks to lend to high LTV borrowers has kept the first-time buyer market strong.
There were 30,000 more first-time buyers in the first half of 2014 than in the same period in 2013, LSL Property Services data shows.
E.surv director Richard Sexton says the market is awash with first-time buyers keen to get on the property ladder before prices climb any further upwards.
“This doesn’t mean they should be locked out of the property market. It does mean that they need further support to get their foot in the door in the first place.
“Many of them fall into the ‘high LTV category’ because they simply cannot build a large deposit whilst savings rates remain low and wage growth remains weak.”
Help to Buy has a part to play
Help-to-Buy lending has been a key solution to this problem, but several lenders are now cutting back on the government scheme, he says.
“If other lenders follow suit, the array of options available for high LTV borrowers will be substantially narrowed.”
Sexton adds: “Help to Buy is particularly needed in the North of the country – where high LTV borrowers make up a far greater proportion of borrowers.
“The economic recovery has been slowly filtering out to the fringes of the UK, but many areas are still stuck in recovery mode.”
