Best July for house purchase lending since the financial crisis
House purchase lending last month was the strongest July since the financial crisis as the Yorkshire economy shows further signs of recovery.
The North fared best, as banks increased lending to high loan-to-value borrowers, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.
This suggests the North-South divide is narrowing, with 20% of all house purchase loans in July to high LTV borrowers being from Yorkshire – the third highest proportion of any UK region.
Richard Sexton, director of e.surv chartered surveyors, explains: “The north-sound divide is finally narrowing. Up until now, much of the evidence has pointed in the direction of a mortgage market recovery focussed in the capital and surrounding South East. But our latest research shows that there has been significant improvement in high LTV lending in the North.”
“It reflects the fact that it’s getting easier for first-time buyers nationwide to access the mortgages available to them, as banks extend more lending to high LTV borrowers across the country.”
There were 56,475 house purchase approvals last month in the UK, up 21% from 46,796 in July 2012, making it the strongest July since 2007.
This has been in part attributed to the introduction of the Funding for Lending Scheme (FLS) last year, which has been credited with driving forward much of the increase in lending.
e.surv feel the Bank of England’s decision yesterday to hold interest rates at 0.5% will further brighten the long term picture.
Sexton said: “Interest rates remaining low will help. And with Mark Carney announcing his plans to keep a lid on interest rates, things should pick up. Greater knowledge about coming monetary policy will help borrower confidence bounce back.”
The caveat to this growth, Sexton continued, is that despite an overall increase in high LTV lending, there remain regions in which it is very tough for high LTV borrowers to access funding.
He also warned there is a long way to go for lending to fully recover. “The mortgage market wants to run at full tilt, but it is being pegged back by weak wage growth and high inflation, which is preventing more significant increases in first-time buyer lending.”
“In July 2007, there were twice as many house purchase loans. Many buyers remain locked in the eternal battle of saving for a deposit. Their wages are growing painfully slowly, and they are losing out in real-terms, as inflation remains high.”