Mortgage lending reaches highest levels since 2008

This is according to the latest Mortgage Monitor from e.surv, which shows there were 68,996 house purchase loans in October.

Approvals also rose 3% from 66,735 in September, pushing figures to a new post-financial-crisis record. Compared to October last year, approvals were 32% higher, equal to 17,000 more approvals. Compared to in January 2013, approvals have risen 27%.

The sustained recovery in lending has been driven further forward by the increasing number of loans that are being approved to buyers with smaller deposits. In October, there were 9,176 loans to borrowers with a deposit of 15% or less of the total value of the property - an increase of 15% to September 2013 and an 80% increase year-on-year. This represents the highest number of high LTV loans since April 2008.

But despite the increase in high LTV lending, the number of affordable properties is decreasing as house prices are being pushed up by a supply some areas. There were just 13,799 loans on properties up to the value of £125,000 in October – typical first-time buyer stock – but this was 6% lower than in September.

Commenting, Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market is bustling with activity as further buyers migrate back to the market.

“Winter may be approaching but that’s not dampening the spirits of potential homeowners, who are moving house, or buying into property in their droves. The sense of economic positivity, arising from rising house prices, falling unemployment and increased lender confidence is catching on like the common cold, and more people are looking to move.

“Help to Buy is needed more than ever, as rising house prices could push more borrowers into the high LTV bracket. House prices have risen 4.3% since last October, according to LSL, but that hasn’t been matched by savings rates or wage growth.

“The size of a deposit needed to access the best rates has risen – and many borrowers are now forced to take out mortgages with just a small deposit saved. It’s had a huge effect on first-time buyers, who haven’t seen their equity share increased.”

Compared to the beginning of the year, the outlook for the mortgage market is far rosier. Approvals slid 2% between December 2012 and January 2013 and a further 4% in the month to February. Approvals still fall far short of pre-2008, when they were consistently over the 100,000 mark, but they are increasing at a far more sustainable rate according to the survey.