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Lending to higher Loan To Value borrowers in the UK has fallen 12% year on year with November seeing the smallest number since October 2013. Despite this the wider lending market is stabilising as house purchase approvals rise 2.8% in November, according to the latest Mortgage Monitor report from chartered surveyor firm e.surv. On a monthly basis, higher LTV approvals fell 6.8% from 8,854 in October. The November dip has compounded monthly falls in October of 18.3% and 5% in September meaning lending to higher LTV borrowers has dropped by 30.1% over the last three months. As a proportion of the market, higher LTV borrowers, typically first time buyers, continue to shrink from a five year peak of 17.8% in August 2014. Their share of total house purchase approvals also dropped in September by 17.7% and by 14.9% in October to hit a 10 month low in November of 13.5%. This comes as the number of first time buyer transactions shrank by 12.3% over the last three months according to the most recent First Time Buyer Opinion Barometer from Your Move and Reeds Rains. ‘Demand has ebbed from the bottom end of the market. After the summer flood of first time buyers, LTI caps introduced in October stemmed the flow of new borrowers into the mortgage market. The Bank introduced these caps against a backdrop of speculation about the market overheating. Now, this wintry cooling is a sign of their pre-emptive action taking effect,’ said Richard Sexton, director of e.surv chartered surveyors. ‘The Chancellor’s changes to stamp duty will make homes cheaper for first time buyers. This was clearly needed. It means that those first time buyers left high and dry by the old system are able to buy at last. Now that the cumbersome slab system has been replaced with a series of graduated rates, the goalposts have shifted for higher LTV home buyers. Whatever twists and turns the New Year takes, first time buyers can rest assured that more properties are now within their reach thanks to this long awaited reform,’ he explained. He also pointed out that in 2014 Help to Buy put capable home buyers in a stronger position to borrow. ‘This increased demand, but putting a finger on just one end of the scale simply inflamed the chronic issue of home shortages,’ he said. ‘The slowdown in higher LTV lending is due in part to the depletion of the UK’s stock of affordable housing. Suggestions in the Autumn Statement that the government will take direct charge of home provision, from the release of land to the building of new properties, will hopefully even the odds for stifled first time buyers,’ he added. Despite the slowdown in lending to higher LTV borrowers, total house purchase approvals grew to 61,108 in November, up 2.8% month on month from 59,426 in October. This uptick comes after a series of decreases, down 1.1% in July, a fall of 2.9% in… Continue reading →

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