Under embargo until 00:01 Thursday 12th February 2015 February 2015

Fastest monthly increase in house purchase lending since 2009

House purchase approvals grow 9.1% month-on-month – largest monthly increase since April 2009

First-time buyer rebound with 10,064 higher LTV loans in January – 1,700 more than December

Higher LTV borrowers make up 15.3% of January approvals, compared to 13.9% in December

Largest proportion of higher LTV lending found in Yorkshire (28%) and the North West (24%)

House purchase approvals have seen the fastest month-on-month increase in over five-and-a-half years as the purchase mortgage market throws off the doldrums of recent months, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 65,778 house purchase approvals in January. This represents a 9.1% increase from 60,275 approvals in December, the largest month-on-month increase since April 2009.

But on an annual basis, house purchase approvals fell 12.9% compared to last year, with 9,779 fewer approvals than in January 2014 (75,557). This makes January 2015 the fifth consecutive month in which the number of loans has fallen on an annual basis.

Richard Sexton, director of e.surv chartered surveyors, explains: “The new year has brought a new market, and lenders have a desire to return to growth. The January lending uptick is testament to this, as borrowers key in to mortgages while interest rates remain at historic lows. However, undoubtedly, some potential borrowers remain thoughtful about the approaching election and are playing a waiting game.

“The market’s young shoots of growth will

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continue to be guided, supported and at times restrained by a rigid structure of legislation. Whilst the Mortgage Market Review and LTI caps are preventing what has previously been perceived as higher risk lending, equally we have Help-to-Buy supporting and encouraging first-time buyers. With the announcement that the Bank’s Monetary Policy Committee is going to be given new abilities to place caps on LTV ratios, it looks like the purchase mortgage market could be closely managed and scrutinised in the run-up to the General Election.”

Higher LTV loans sweep back in January

Loans to higher LTV borrowers grew 20.1% between December and January. The first month of 2015 saw 10,064 loans to borrowers with deposits worth 15% or less of their property’s total value, compared to 8,378 in December.

While this month-on-month growth is partly due to the increase in the total number of approvals, higher LTV borrowers also occupied a larger proportion of borrowers in January – 15.3% of borrowers were higher LTV, compared to 13.9% December. On an annual basis, the proportion of higher LTV borrowers is 1.7 percentage points higher than January 2013, when they made up 13.6% of all house-purchase loans.

The latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains found that the number of first-time buyer property completions fell to 24,800 in December from 25,900 in November – a 4.2% drop. January’s month-on-month increase in mortgage approvals could, however, boost numbers of first-time buyers further.

Richard Sexton, director of e.surv chartered surveyors, comments: “Help to Buy is doing its work, plugging the savings gap left by low interest rates, enabling first-time buyers to get on the property ladder despite only being able to save small deposits. Lenders are locked in a price war, offering ever-lower repayment rates to try and bring in borrowers – confident first-time buyers will take this as a sign that the ball is in their court.

“But first-time buyers can be challenged by the introduction of new regulation. No matter how you slice and dice it, caps add another layer of complexity for people fresh to the house-purchase market. With the Bank of England’s new powers to reign in LTVs, first-time buyers are a group that could be more affected than others.

“While regulatory supervision is clearly important, it needs to be nuanced. A combination of Help-to-Buy, LTI caps and LTV caps mean there are some conflicting drivers in the market that could leave aspiring homeowners below the property ladders’ bottom rung.”

Regional snapshot: North West see more higher LTV Loans

Yorkshire led the way for higher LTV lending, with 28% of all approvals in January being made to borrowers with a deposit worth 15% or less of their property’s value. The North West came in a close second, with a quarter (24%) of all approvals being made to small-deposit borrowers. The story is quite different for London, where just 7% of house

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purchase approvals were higher LTV.

Region Proportion of loans that are higher LTVYorkshire 28%

North West 24%

Midlands 20%

UK Average 15%

Eastern 14%

Northern Ireland 13%

South/South Wales 13%

South East 12%

Scotland 11%

London 7%

Richard Sexton, director of e.surv chartered surveyors, comments: “Help to Buy is reaching the areas that need it most. Without Help to Buy stepping in to lift first-time buyers into the range of higher LTV loans, we can see that the north could be suffering from a real crisis. With a quarter of house purchase approvals depending on higher LTV lending in the North West – and even more than that in Yorkshire – the scheme is providing a lifeline for buyers otherwise priced out of the lower end of the mortgage market.”

LOANS FOR HOUSE PURCHASE - seasonally adjusted

Month Number Monthly change Annual change

August 64,016 -3.1% +0.8%September 61,367 -4.1% -8.6%

October 59,350 -3.3% -13.3%November 58,956 -0.7% -16.9%December 60,275 +2.2% -16.7%January 65,778 +9.1% -12.9%

– ENDS –

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Notes to Editors

Methodology

e.surv analyses detailed data on over one million mortgage valuations the firm carried out between August 2006 and today. Each month, the researchers analyse tens of thousands of valuations and use these trends to extrapolate from the Bank of England’s mortgage data to publish mortgage approval numbers for the whole of the UK, weeks before the BBA, CML and Bank of England.

The Mortgage Monitor is prepared by The Wriglesworth Consultancy for e.surv. The copyright and all other intellectual property rights in the Mortgage Monitor belong to e.surv. Reproduction in whole or part is not permitted unless an acknowledgement to e.surv as the source is included. No modification is permitted without e.surv’s prior written consent.

Whilst care is taken in the compilation of the report, no representation or assurances are made as to its accuracy or completeness. e.surv reserves the right to vary the methodology and to edit or discontinue the report in whole or in part at any time.

About e.surv

e.surv is one of the UK’s largest valuation providers, directly employing surveyors across the UK, supported by a network of consultant valuers. The business is the largest distributor and manager of valuation instructions in the UK and is appointed as Panel Manager for more than 20 mortgage lenders and other entities with interests in residential property. The business also provides a number of private survey products direct to the home-buying public. e.surv is a subsidiary of LSL Property Services plc. For further information, see www.lslps.co.uk.

Press contacts

Tora Turton, The Wriglesworth Consultancy, v.turton@wriglesworth.com, 020 7427 1445

Justin Blanchard, The Wriglesworth Consultancy, j.blanchard@wriglesworth.com , 020 7427 1407

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