First-time buyer lending up 11%

According to detailed analysis of the mortgage market, 2012 was the best year for high loan-to value lending since 2007, with an increase in lending to first-time buyers of 11%.

The Mortgage Monitor from e.surv chartered surveyors showed that 63,896 house purchase loans were granted to buyers with small deposits last year, up from 57,691 in 2011.

This was the first time the number of loans breaching the 600,000 mark since the financial crisis.

Richard Sexton, business development director of e.surv chartered surveyors, said: “The first half of 2011 was pitifully weak for mortgage lending, even by post-2008 standards.

“The Eurozone crisis was in full swing back then and lenders’ funding lines were painfully constrained.

“The crisis began to stabilise in 2012, which boosted confidence and increased banks’ appetite for riskier lending to high LTV borrowers.”

Whilst lending levels were equal across the two halves of the year the two periods told very different stories with lenders choosing to focus on lending to wealthier borrowers in the second half.

This meant there were 34,217 loans to borrowers with small deposits in the first half of the year, but just 29,679 in the second half.

Mr Sexton explains: “Lending levels in the second half of the year were only sustained by a disproportionate focus on lending to wealthier buyers, whereas in the first half of the year the improvement in lending was spread more equally between poorer and wealthier borrowers.

“2012 epitomised a ‘tale of two halves’ as far as first-time buyers lending was concerned. Despite that, new buyer numbers still climbed to their highest in five years by the end of 2012.

“But the market still has a long way to go until it reaches full health again: there were 177,593 loans granted to high LTV borrowers in 2007, compared to just 63,896 last year.”

Mr Sexton said the prospects for the year ahead were relatively encouraging with Funding for Lending starting to have an increasing effect on the market.

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