The number of home loans approved increased month on month for the first time in 12 years in January 2014 according to chartered surveyor e.surv.
The number of mortgage approvals increased by 24% to 65,142 in January 2014, up from the 52,619 recorded in December 2013 marking the first time since 2002 that the number of loans has increased between December and January.
Richard Sexton, director of e.surv, said: “January was something of an anomaly in the mortgage market. We normally witness a January slowdown in the mortgage market, in which borrowers choose to pay down Christmas debt rather than invest in property, but this year both banks and buyers have continued full steam ahead.
“Demand is strong from the top to the bottom of the market. First-time buyers are keen to lock into cheap deals and get on the ladder, especially with recent talk around a potential base-rate rise and the revision of forward guidance.”
The two contributing factors appear to be that lenders are pushing ahead with lending targets in advance of Mortgage Market Review (MMR) regulations, due to be introduced in April and an unprecedented demand for homes.
The average LTV also rose in January to 62.3%, the highest value since August 2007, as banks continue to lend more to borrowers with smaller deposits with just 14% of loans to high LTV borrowers in January, an increase from 12% in December.
Sexton said: “Lenders are welcoming high LTV borrowers back to the market, which has opened the flood gates to first-time buyers. Help to Buy is encouraging renters to get onto the property ladder. In the North East & Cumbria and the North West in particular, the scheme is needed to help cash-strapped borrowers get on the ladder. But Help to Buy is still needed in the capital, where deposit requirements are painfully high.
“House prices are rising quickly in many areas, and the increase in high LTV loans is keeping the life-blood flowing in the market – by stopping a host of buyers being priced out of the market entirely.”
The North is the home of the high LTV as in the North East & Cumbria 25% of all home loans in January were to borrowers with a deposit worth 15% or less of the total value of their property, whilst the North West and Yorkshire recorded 23% and 21% of home loans in the high LTV bracket in January. London had the least number of high LTV loans at just 6%.
