Mortgage Loan Approvals Increase

Mortgage Loan Approvals Increase

More “Help To Buy” Mortgage Lenders Announced

The number of mortgages given to first-time buyers increased by a third in the 12 months to August 2013 according to the latest data from the Council of Mortgage Lenders (CML), with new entrants to the property market accounting for 44% of all residential property purchases during the month.

The CML figures were published as Barclays became the latest high street lender to confirm it was signing up to the second part of the government’s Help to Buy scheme, which is designed to make more 95% mortgages available to first-time buyers, second steppers and home movers.

Barclays join Santander, RBS, Halifax and HSBC in confirming it will use the taxpayer-backed guarantee to make high Loan-To-Value (LTV) mortgages available for property purchasers, meaning that more than half of UK mainstream mortgage lenders are now signed up to provide more mortgages at higher loan to value ratios.

The Chief Secretary to the Treasury defended the Government’s ‘Help to Buy’ scheme last week, against charges of driving up residential property prices by creating more demand for fewer available properties.

The CML figures show that even before the second part of Help to Buy scheme became live last Tuesday, UK mortgage lending to first-time buyers was growing strongly with a total of 27,100 home loans to new entrants to the housing market being completed in August, an increase of 7% on the month and a 33% increase year-on-year.

The value of lending also rose sharply as first-time buyers took on £3.8 Billion (GBP) debt representing an increase of 9% compared to July and a 46% increase on August 2012.

The CML said first-time buyers typically took out mortgage loans worth 3.36 times their average income in August 2013 compared to 3.31 times their average income in July 2013 and 3.25 times their average income in 2012.

In contrast, the number of mortgage loans approved for second steppers and home movers rose by 7% month-on-month and just 5% year-on-year to 34,200. The value of that lending was up 9% annually at £6 Billion (GBP).

Figures for overall UK buy-to-let lending, showed the number of mortgage loans approved had dropped to just 14,900 in August 2013, down from 15,200 buy-to-let mortgage approvals in July 2013.

However, also contained within the overall figure of buy-to-let mortgage approvals are a large number of buy-to-let mortgage loans granted to landlords buying more properties to expand existing rental property portfolios rather than simply re-mortgaging existing properties, and this figure had increased from 7,600 to 7,900 in August 2013.

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