Mis-sold Mortgage Claims > Mortgage News
Mortgage lending falls as first-time buyers get higher LTVs
Mon, 14 Mar 2011
The Council of Mortgage Lenders (CML) has announced that there has been a fall of 26 per cent in house purchase lending in January. This was much higher than expected, it was, however, positive to see that first-time borrowers (FTB's), on average, had to find lower deposits as the loan to value, (LTV) for FTB's increased from 77 per cent in December to 80 per cent in January.

The fall was larger than expected by industry experts, this was said to be led by "the poor weather" and a mix of negative economic factors which included the rise in VAT to 20 per cent. Remortgages, however, did see a small increase in the share of overall lending, approvals for remortgage loans also continues to rise month on month.

The market is expected to remain flat as lenders continue to be cautious in their approach to loan approvals and many do not have an appetite to lend to higher LTV borrowers. The mortgage market review, still continues to influence lenders policy on risk, the slow down in approvals for interest-only mortgages is a clear sign of their caution.

CML director general, Michael Coogan, commented, "Pressures on household budgets have been increasing both in terms of take home pay, and indirect tax measures such as the VAT increase and recent inflationary pressures, so we were expecting a fall in transactions early in the year, and a flat mortgage market underpins our forecasts for 2011.

"The bad winter weather and uncertainty over interest rate rises will have exacerbated the fall in lending in January, so it would be premature to draw any firm conclusions about activity levels over the next few months. The market remains stable at low levels of transactions."
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