The number of house purchase loans granted in September topped 68,000 for the first time since February 2008, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.
There were 68,212 loans advanced to homebuyers in September, the highest number since the financial crisis took hold. It represents a rapid recovery in the space of twelve months – there were only 49,987 homebuyer loans last September, 36% lower than September this year.
House purchase lending in September was significantly greater than in August, as lenders confidence in the economy strengthened. House purchase lending was 10% higher month-on-month, an improvement of almost 6,000 loans. This pushed lending figures to a post-financial-crisis record.
The number of high LTV borrowers, with deposits worth 15% or less of the total property value, also increased. There were 8,185 high LTV loans in September, 60% more than twelve months ago, and 11% more than in August, when there were 7,343. It was the highest number of high LTV loans since September 2008.
Richard Sexton, director of e.surv chartered surveyors, explains: “The housing market is speeding back to recovery, and that’s before Help to Buy even begins to kick-in. In September, more people were buying a house than at any point in the last five-and-a-half years. And the rate of recovery is increasing rapidly. Lenders are saying yes to more borrower applications, and are more willing to lend to borrowers with small deposits than they were last year.
“Our economy is the fastest growing in Europe – and it’s being driven by the recovery in the housing market. The introduction of Help to Buy 2 could floor the accelerator, and we could see unprecedently quick growth.”
Research from e.surv’s parent company, LSL Property Services, revealed the average mortgage rate for first-time buyers has fallen below 4.00%, with rates falling in every month of the year to July. In the year to July, the average mortgage rate for first-time buyers fell from 4.66% to 4.31%. This has triggered a surge in first-time buyers entering the housing market, which has boosted the number of house purchase approvals.
The North remains the hotspot for high LTV lending. In September, a quarter (25%) of all house purchase approvals in the North East and Cumbria were to borrowers with a deposit of 15% or less. There were 837 loans to high LTV borrowers in September in this region, up from 622 in August.
High LTV lending was also high in the North West. The region contained more high LTV loan approvals than any other region of the UK, with 1,383 loans to high LTV borrowers in September. This was 165% higher than the number in London (521), where high LTV loans made up just a 6% share of lending.
Richard Sexton, director of e.surv chartered surveyors, explains: “Help to Buy is important for the whole country. Lending levels and house sales may be recovering, but first-time buyer numbers are still short of their pre-2008 levels. It will help people in areas where incomes are low, and also help people in areas like the South East, where house prices are so high that even people with well-paid jobs aren’t getting a look-in.
“To help make the market sustainable, the improvement in lending and sales absolutely must be complemented by more house building – otherwise the market could overheat and become unaffordable for the next batch of first-time buyers.”