Mortgage approvals hit a 2 year high

According to the latest Mortgage Monitor from e.surv chartered surveyors, new mortgage applications and approvals reached their highest number since December 2009.

The rise in mortgage approvals was driven by an increase in the number of first-time and low income buyers, who were the beneficiaries of more favourable lending conditions. More first-time buyers are putting together the bigger deposits required to access high loan-to-value mortgages.

There were also more loans to borrowers with small deposits. Loans to borrowers with a deposit of 15 per cent or under, accounted for 13 per cent of all lending in November. This this was up from 10 per cent in October, and is the highest since October 2008. The average deposit on a typical first-time buyer property fell to 31per cent , the lowest since August 2008, and down from 33 per cent in October.

Although the increase in mortgage approvals is encouraging, it remains true that first time buyers are still struggling to get onto the property ladder. This is due to the lack of products and reasonable rates at the higher loan to value loans. Mortgage lenders want people who are low risk, where there is plenty of equity in the property.

To stimulate the housing market, more first-time buyers are needed. The housing market is still very much a 'buyers’ market'. Any increase in mortgage approvals is also likely to be as a result of increasing numbers of buy to let purchases, particularly given the recent increase and improvements in Buy to Let mortgage products.