The expansion in LTVs was driven by those buying homes worth over £500,000 who were offered an additional 2.8% of the value of their property in December compared to November, according to the surveyor.
Meanwhile, the volume of mortgages approved for house purchase dipped slightly in December, down 0.5% after a strong rise in November. e.surv projects that 47,763 mortgages were approved in the month, the second highest volume since August, suggesting the market remains more buoyant than some fear - particularly as some approvals may spill over into Jan as a consequence of difficult December weather.
Year on year, December 2010 was 17.3% below December 2009 which had been boosted by a rush to take advantage of the stamp duty holiday. Despite the outcome being better than some feared, December 2010 was still the second lowest on record for mortgage volumes, according to e.serv.
Commenting, Richard Sexton, business development director of e.surv said: “December’s mortgage market contended with impossible weather conditions, and a strong November, but was relatively resilient with only a small decline in volumes, and a big improvement in the loan-to-value ratios offered by lenders.”
In December, the average loan-to-value ratio hit a two year high, but at 58.9% in December 2010, it remains well below the peak of over 69% in 2006.
Once again, those buying higher value homes have received the most generous treatment from lenders, seeing the biggest expansion in LTV ratios. Those buying homes valued at over £500,000 have seen LTVs expand 14% points since the market’s nadir, and can still borrow almost as much as they could before the credit crunch. Those at the bottom of the market are still seeing lenders offer mortgages at significantly tighter LTVs than before, despite some improvement since the post-Lehman’s freeze.
Richard Sexton concluded: “There is no doubt lenders are being selective with their limited funds, growing their business by supporting wealthier customers and offering them ever more generous terms.
“For the long-term health of the housing market, borrowers and lenders alike, it is important that the bottom of the market is not neglected. Lenders recognise this and more recently there are signs of improvement for lower value borrowers who will provide the next generation of those trading up in the market.
“But one swallow does not make a summer and the mortgage market, like the country, is still suffering from the freeze.”
