Housing round up: Good news for first time buyers as high loan to value mortgages make a come back


Housing & mortgage round upThis week’s housing round up includes news that  might indicate some light at the end of the tunnel for first time buyers looking for higher loan to value mortgages. Whilst the  number of house hunters increase and rents fall in the buy to let sector

Increased mortgage choice for first time buyers

New research shows that mortgages products requiring a smaller deposit, typically used by first time buyers, are making something of a comeback; however demand for higher loan to value mortgages is still outstripping supply.

Figures released by Moneyfacts show that the number of mortgage products available has risen over the past 12 months from 2,527 to 3,180. The greater number of higher loan to value mortgages, at 90 and 95%, have helped push up the total number of mortgages available.

However, mortgages products are only now available for an average of 27 days, lower than the long term average of 30 days and indicating greater demand than supply.

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First time buyers, who have traditionally needed to use higher loan to value mortgage products, have been particularly hard hit by the credit crunch and falling house prices, which have caused most lenders to demand larger deposits. However, the figures from Moneyfacts show there may be some light at the end of the tunnel for first time buyers. There are currently 49 mortgages available at 95% loan to value, double the number available this time last year and a massive jump from the paltry three, which were available in April 2009.

The number of mortgage deals available to buyers with a 10% deposit has also increased significantly.

The data from Moneyfacts was supported by the Bank of England’s latest ‘Trends in Lending’ report, which said: “Lenders expect the availability of secured credit to households to increase slightly in 2012 Q1, with the rise concentrated on borrowers with high LTV (loan-to-value) ratios”.

Despite the increase in the number of mortgage products, financial experts have warned that mortgage lending criteria is still tight, and just because a mortgage deal is available there is no guarantee a mortgage application will be accepted.

Number of house hunters increases

The National Association of Estate Agents (NAEA) has released figures which show the number of house hunters increased in December, perhaps indicating greater buyer optimism for 2012.

According to the figures each estate agent had on average 294 house hunters registered on their books, up by 32 from the month before.

The number of first time buyers registered with estate agents also increased.

NAEA regional executive for the north sector, Mike Poole, said: “Many members were kept busy right up to the Christmas break which bodes well for 2012. Sales were being agreed and a limited number of viewings were still booked in right up until the festivities began.”

The increase in house hunters has not yet translated into completions, which were down in December and at their lowest level for a year. However, this is perhaps not surprising given the relatively lengthy time it takes to complete a property transaction in the UK.

Dismay for buy to let landlords as rents fall

Rents fell in December for the second successive month.

The Buy to Let Index from LSL Property Services, who own the UK’s largest network of letting agents, shows that rents fell in England and Wales by 0.8% during the month of December.

The average monthly rent is now £711.

Despite the falls seen in November and December rents during 2011 rental inflation still rose by 4% over the past 12 months.

LSL Property Services also revealed that tenant demand was still strong and up on December 2010. Much of the increased demand is due to the tight lending criteria imposed by many mortgage lenders, forcing those who cannot obtain mortgage finance into rented accommodation.

David Newnes, director of LSL Property Services, said: “With the mortgage market facing challenges from the eurozone crisis and the sluggish wider economy, credit conditions are unlikely to ease significantly in the coming year. As a result, the number of first-time buyers able to secure finance isn’t about to rocket up, and demand for the limited supply of rental accommodation will continue to rise. It won’t be long before rents will resume their upward march.”

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