House purchase lending stabilises in October

House purchase lending stabilises in October

  • Lending beginning to recover, as monthly house purchase approvals rise 1.1% in October
  • However, house purchase approvals fall 9.2% on a twelve-month basis, from 68,252 in October 2013
  • Fewer loans to borrowers with limited deposits: proportion of higher LTV loans makes up just 14.9% of all lending, down from last month’s 17.7%

House purchase approvals perked up in October after three consecutive months of slowdown as the house purchase market stabilises, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

Monthly house purchase approvals have grown in October, rising to 61,952. This represents an increase of 1.1% from September’s 61,267, the first monthly growth since the end of the second quarter. The upturn comes after three consecutive months of slowdown in July (-1.2%), August (-2.9%), and September (-4.4%).

However, there were 9.2% fewer house purchase approvals compared to October 2013, when there were 68,252 approvals. This is the largest annual decrease since August 2012, and also makes October 2014 the second consecutive month in which house purchase approvals have fallen on an annual basis.

Richard Sexton, director of e.surv chartered surveyors, explains: “The purchase mortgage market is self-correcting to operate at a more constant, stable pace — the very reason that MMR was introduced. Now that regulatory changes have tightened up the nuts and bolts of the lending process, we can look forward to careful constancy rather than the unhealthy acceleration we saw before the recession.

“Far from the screech of brakes, this is the sound of a well-oiled engine humming in a sustainable gear.”

Higher LTV loans drop off in October

Higher LTV lending declined 14.9% between September and October. There were 9,231 house purchase approvals to borrowers with a deposit of 15% or less of the total value of their property in October, down from 10,844 in September.

These higher LTV borrowers — typically first-time buyers — constituted just 14.9% of all house purchase borrowers in October, the lowest percentage in six months. Their share of the market had been stable from June to September, fluctuating very slightly between 17.4% and 17.8%. Annually, only 1.7% more higher LTV loans were approved last month than in October 2013, far fewer than September’s annual increase of 34.6%.

However, mortgage approvals on properties worth £125,000 or less remained fairly static. Properties in this price bracket account for 19% of the market as of October 2014, a small change on a monthly basis from 21% in September 2014 and on an annual basis from 20% in October 2013. The average LTV for these homes was 70% in October 2014, down slightly from 71.1% the month before, but higher than 68.7% in October 2013.

Richard Sexton, director of e.surv chartered surveyors, explains: “Slow wage growth and low interest rates have made it difficult for borrowers to save for larger deposits. Help-to-Buy had been counteracting this by making it easier to acquire higher-LTV loans. However, the introduction of further regulation in the form of Loan-to-Income caps in early October has taken some of the wind out of first-time-buyers’ sails.

“The increasingly rigorous testing may have seemed daunting to prospective homeowners — a negative image has likely had a dampening effect on the real positive influence of MMR and Help-to-Buy. In addition, those who have seen regulation for the vital tool it is have started to buy up the existing stock of starter homes.

“It is not enough merely to tinker with the financial conditions of first-time buyers and those that lend to them with schemes like MMR or Help-to-Buy — especially if these necessary checks and balances are misconstrued by the very people they are meant assist. In some areas of the country we’re approaching a situation where if more houses aren’t built, more houses can’t be sold.”

e.surv

http://www.esurv.co.uk/

As the country’s leading firm of chartered surveyors, we have a network of more than 400 RICS regulated surveyors working from coast to coast. Every day we’re working in partnership with conveyancers to offer their clients the best advice when it comes to the condition of the new home they are looking to purchase. Our aim is to support customers to help them buy their new home with confidence. Our comprehensive research has shown that 80% of home buyers wrongly rely on the lender’s mortgage valuation to provide information on the condition of the property they are buying. . We believe it’s better for you, and your customer, to have the best advice as early as possible in the transaction, to help the sale proceed smoothly and without any unexpected delays. Recommending a survey to e.surv is easy. As one of our official partners you will have direct access to a booking portal to allow you to submit your customer details for us to arrange their inspection. As part of our agreement, we will offer you a commission . When you choose e.surv Chartered surveyors as your surveying partner you’re guaranteed great service: - online booking facility - national network of RICS regulated surveyors - RICS Condition Reports, RICS HomeBuyer Reports and Building Surveys prepared and emailed directly to your customer - Partners’ helpline to answer any questions


Contact: Sarah Faulkner Tel: 0800 169 9661 Email: sarah.faulkner@esurv.co.uk Address Lahnstein House Gold Street Kettering NN16 8AP

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