High LTV Lending hits 6yr high

In February, just over a sixth of all house purchase loans were to borrowers with a deposit worth 15% or less of the total value of their property.

There were 11,138 high LTV loans, 6% more than the 10,465 in January 2014 – despite the overall number of home loans falling over the same period. It was the highest monthly number of high LTV loans since April 2008 (when there were 12,489). And the average LTV climbed to 63.5% as a result – its highest level since August 2007.

House purchase lending rose 37% year-on-year in February 2014, from 52,023 approvals to 71,396 approvals.
It was the strongest February for house purchase lending since the financial crisis (2007). However, on a monthly basis, the number of house purchase approvals fell 7.2% from 76,947 in January 2014, in part due to adverse weather conditions discouraging movers in the short term.

Richard Sexton, director of e.surv chartered surveyors, said: “A bumper crop of high LTV deals is tempting more buyers back to the market. Banks are far more willing to lend to borrowers with a limited savings pot.

“New buyers are keen to get on the ladder before house prices rise beyond their reach, and they are utilising the Help to Buy Scheme to get an initial foothold. The result, the number of monthly home loans is slowly winding its way back into pre-recession territory.

“The countdown to the introduction of MMR regulations has begun. The new rules will demand rigorous stress testing of buyers, which could further tighter regulation, and could make it more difficult to get on the ladder. We are seeing both banks and buyers pushing ahead with lending ahead of this cut-off.”