December 03, 2010
Cara WatersZ
Magazine: FTAdviser


Mortgage market thaws in November


The mortgage market thawed in November according to e.surv Chartered Surveyors.

The latest mortgage monitor from e.surv shows the first loosening of credit conditions in the mortgage market since before the general election with more mortgages being approved for borrowers and on more generous loan to value (LTV) ratio.

The monitor found the number of mortgage valuations conducted grew 3.5 per cent in the month, pushing the volume of mortgage approvals in November to 48,846 on a seasonally adjusted basis, compared to 47,185 in October.

This was the highest level since May, and the first month-on-month increase since April.

The average LTV ratio soared by almost one percentage point reaching 57.7 per cent in November, the first increase since June, and well up on the meagre 53 per cent from November 2009.

Although LTV ratios expanded in all segments of the market, borrowers buying more expensive homes generally saw LTV rise further than those buying average priced homes, in the £126,000 to £250,000 category, although wealthy borrowers required much smaller LTVs overall.

Only borrowers of the very cheapest and most expensive homes bucked the trend, but these represent smaller volumes of loans than the average home value.

David Brown, commercial director of LSL Property Services, said the mortgage monitor reflects a lot of pent up demand to move home.

He said: "The strength of November's figures shows how much the availability of mortgages is controlling the housing market.

"When lenders make more money available, borrowers snap up the mortgages on offer and the market gets a lift.

"We’re not out of the woods, as lenders on the whole are still not lending enough largely due to a mix of caution about prices and the need to repay their £300bn loan from the government.

"If they loosened their criteria on lending even just a little it could make a big difference to borrowers and result in some more house sales.”


Nicholas Leeming, commercial director of Zoopla.co.uk, said people lined up to buy homes in November as lenders slackened their grip on mortgage credit after a miserly year.

He said: "There is a lot of demand to buy – from first-timers, to home-movers, to landlords keen to exploit soaring rents.

"The worry is that lenders slip back to their over-cautious attitude next year, blocking the road to recovery."