Market sees August slump

There were 63,485 house purchase approvals in August compared to 66,569 in July. It was the second consecutive month they declined, as from the start of June they have fallen by 5.4%.

Annually approvals remain 0.3% higher than the 63,293 recorded in August 2013.

Richard Sexton, director of e.surv chartered surveyors, said: “The summer holiday season has temporarily slowed the mortgage market, as home-movers hang up their property search in exchange for buckets and spades.

“But this is a seasonal stagnation rather than a sign of a more permanent decline.

“The new MMR regulations have been fully absorbed into the mortgage application process, the backlog of applications they temporarily caused has all been cleared away, and now the mortgage market is in full health moving forwards.

“As the seasons change and we move into autumn, we are already anticipating that mortgage approvals will bounce back upwards.”

High loan to value lending now forms a greater proportion of the market, having grown by 51% year-on-year to August, when 11,300 loans above 85% LTV were issued.

Of the total lent in August high LTV purchases accounted for 18%, the highest proportion since 20.6% was recorded in 2008.

The North West and Yorkshire and Humber (28%) saw the highest proportion of high LTV loans in the UK.

Sexton added: “Higher LTV borrowers are a growing presence in the mortgage market, because it remains extremely difficult for borrowers to save for a significant deposit.

“Prices remain high, interest rates are still stuck at rock bottom, and real wages are only just starting to show signs of creeping back up. The economic recovery may be blazing forward, but many households are still rebuilding their finances after seven years of struggle.

“But the wide range of higher LTV options available to borrowers is keeping the door to the market open to them – helping first-timers in particular to purchase property.”

The Help to Buy scheme has lately made the biggest impact in the east of England (6.2%), followed by the North West 3.8% and Scotland (3.7%).