Valuations firm says FTB loans fall in two tier market
Friday 10th August 2012
House purchase loans rose in July, national valuations firm e-surv has claimed.
But its report is in marked contrast to its competitor Connells, which said that mortgage market activity went down by 13% in July.
According to e-surv, making predictions from its own data, there were 49,561 house purchase mortgages in the month, up from 44,192 in June.
It claims the rise was driven by wealthier purchasers, with fewer than one in ten loans going to buyers with deposits of under 15%.
As a result, says e-surv – part of the LSL Group – first-time buyer numbers fell. There were just 11,399 loans for purchase of property worth up to £125,000, 6% lower than the average so far this year of 12,111.
House purchase loans for property worth over £500,000 rose 15%, and loans for purchases over £750,000 rose by 17%, reflecting the disproportionate share of the market by wealthier buyers.
Richard Sexton, business development director of e.surv, said: “Lending rose in July because the market was making up for all the time lost in June, rather than because it is becoming easier to get a mortgage.
“It doesn’t hide the two-tier nature of the mortgage market, with equity-rich borrowers dominating activity while many first-time buyers are locked out by banks’ lack of appetite for high loan-to-value lending. While credit is so scarce, banks would rather focus on sustaining lending to wealthier borrowers and buy-to-let landlords.
“The mortgage market has a long way to go before it climbs out of the deep hole dug by the chronic lack of first-time buyer loans and the constraints of tough lending criteria. But escape from that hole looks a long way off.
“The economy is contracting and the eurozone crisis could still bubble over at any point, meaning banks won’t begin increasing their lending to first-time buyers any time soon.”
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