More mortgages were approved for borrowers and on more generous loan-to-value ratios, according to e.surv Chartered Surveyors.
The number of mortgage valuations conducted grew 3.5% in the month, pushing the volume of mortgage approvals in November to 48,846 on a seasonally adjusted basis, compared to 47,185 in October. This was the highest level since May and the first month-on-month increase since April. Nevertheless the number of mortgages to buy homes was still over a sixth (17.5%) below November 2009.
The average loan-to-value ratio soared by almost one percentage point. It reached 57.7% in November, the first increase since June, and is well up on the meagre 53.0% from November 2009. The nadir was reached in December 2008 at the low point of the post-Lehmans shock. Then, lenders only advanced less than half (49.4%) of a home’s value on average.
Higher value properties broadly saw the best of the loosening in lending constraints. Although loan-to-value ratios expanded in all segments of the market, borrowers buying more expensive homes generally saw loan-to-values rise further than those buying average priced homes (in the £126-250k category), although wealthy borrowers required much smaller LTVs overall. Only borrowers of the very cheapest and most expensive homes bucked the trend, but these represent smaller volumes of loans than the average home value.
Richard Sexton, business development director of e.surv said: “November was a rare bright spot for the mortgage market. There were some very attractive products available and that stimulated a lot of demand from borrowers, both to buy homes and to remortgage. Lenders are still more comfortable focusing on wealthier borrowers and are prepared to expand loan-to-value ratios more for these groups than the average, but there was also an unusually large improvement in credit conditions for the lowest value borrowers too.
“Such a strong month will be hard to beat from here, but tales of the renewed demise of the market are hard to reconcile with this sort of strength. The market usually goes very quiet in December of course, so the next big test for the market will be in the new year. January is the month to watch.”