Mortgage approvals hit 15 month low
In a survey conducted by e.surv, it has been found that in the past month, mortgage approvals have fallen 14% to their lowest level in 15 months, sparking fresh fears about the state of the mortgage market.
Since the beginning of 2012, lenders have been trying to scale back on their mortgage loans in order to protect themselves against buyers who risk defaulting on their mortgages, and in response to a weakened economy. This means that many first time buyers and other risky buyers such as those looking for contractor mortgages, are finding themselves unable to obtain the mortgages they are looking for.
Interest only loans are all but obsolete at the moment, as lenders tighten restrictions on their interest only products, and in some cases have taken them out of their range altogether, meaning those looking for cheaper, more flexible loans are having to look into other options. With a lack of mortgage products on the market at the moment, this is not an easy process, and is causing many potential buyers to fall out of the property market altogether.
Lenders have also tightened their criteria for high LTV mortgages meaning many people are no longer able to get a mortgage with a deposit of 10% or less. e.surv found that lending to borrowers with a deposit of 15% or less accounted for only 10% of all mortgages approved in March this year. Higher LTV mortgages had only just started to make a resurgence after the recession and it seems that now lenders are uncomfortable with high LTV mortgage again they may start to sink back down again. This is bad news for the mortgage market, and first time buyers in particular, who often have to rely on mortgages which allow them to have a lower deposit in order to make that first step onto the property ladder.
The survey also found that lending to borrowers with very high deposits was at its highest since January 2011, and one third of all mortgage lending went to those with deposits of 40% or more in March. This is a shocking result which seems to show a decline in the mortgage market which is continuing to put off new buyers, and only catering for the very wealthy and those with perfect credit scores. This will affect the property market just as much as the mortgage market, as with less buyers on the market the property market looks set to stagnate over the coming months.
Article by: Jonathan Veers, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
Tel: 0844 44 88 800