Lenders Demand High Deposits
Mortgage lenders are still demanding high deposits from buyers as the number of deals expands.
More than two-thirds of the 1,485 mortgage deals on offer require the customer to put up a deposit of at least 25%, according to Moneyfacts.
This crept up slightly to 68% of home loans on 6 April compared with 66% a month earlier.
Some recent figures have suggested that the moribund housing market may have started to show some signs of life.
Deposit demand
The number of mortgage deals on offer has increased slightly from 1,398 to 1,485 over the last month, according to financial information service Moneyfacts.
The number of mortgages available at 90% of the value of a home has dipped, down from 101 at the start of March to 93 on 6 April. Deals with a loan-to-value rate of 85% have risen, up from 237 to 258.
David Hollingworth of London and Country Mortgages suggested that this might be because lenders were still being cautious about their lending criteria.
“The increase in deals with a 15% deposit could be due to lenders reducing the number of, or withdrawing altogether from, deals with a 10% deposit,” he said.
However, he added that some mortgage providers were offering 90% mortgages again through brokers – their primary source of custom.
Interest rates on these mortgages were not as attractive, or falling in the same way, as those with a loan-to-value of 60% or 75%.
The number of deals in this range is also growing, up from 921 at the start of March to 1,016 a month later.
Survey results
The figures come after a recent set of contrasting results from house price surveys.
The Nationwide Building Society reported that property prices rose by 0.9% in March compared with the previous month. The following day, Halifax, now part of the Lloyds Banking Group, said that prices fell by 1.9% during the same period.
Recent surveys from the Royal Institution of Chartered Surveyors (Rics) have shown rising interest from prospective buyers.
Mr Hollingworth said there was anecdotal evidence that increasing numbers of potential buyers were “scoping out” the mortgage market to see what deals they could get before making offers on properties.
House Price Decline Continues To Rise
House prices are falling even faster than before in England and Wales, according to the Land Registry.
Prices dropped another 2% in February, pushing the annual rate of decline from 15.1% to 16.5%.
It means the average property is now worth £153,862, down by £30,361 in the last year, and back to the level last seen in September 2004.
House price inflation has fallen for 18 months, due to the impact of the recession and the credit crunch.
The Land Registry’s figures confirm the downward trend indicated by other surveys, such as those from the Halifax and the Nationwide.
Hand-in-hand with the fall in prices has gone a slump in sales.
This week the HM Revenue & Customs (HMRC) published figures showing that property sales in the UK hit a new low this year.
There were just 42,000 completed transactions in February, only slightly higher than in January but still half the level seen a year ago.
Earlier this month figures from the Bank of England suggested that the number of mortgages being approved, but not yet lent, had bottomed out at an average of 31,000 for each of the past six months.
But despite surveyors and estate agents reporting a pick-up in enquiries from would-be buyers, there is little evidence so far that this is translating into higher sales.
“Lower prices and the cheap cost of money has begun to fuel an increase in buyer interest as reflected in the RICS “new buyer enquiries” series which has risen for four consecutive months,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).
