Last month was the strongest July for house purchase lending for seven years – since the start of the financial crisis – with the market “awash” with first-time buyers.E.surv, part of LSL...
Last month was the strongest July for house purchase lending for seven years – since the start of the financial crisis – with the market “awash” with first-time buyers.
E.surv, part of LSL, is forecasting that there were 66,279 house purchase approvals in July, up from 61,651 in the same month last year.
Its forecasts have an average margin of error over the last 12 months of 2.8%.
The company also notes that as house prices rise, mortgages taken out on cheaper properties are decreasing.
It says that first-time buyers are increasingly taking out high loan-to-value mortgages on more expensive homes.
It forecasts that there were 13,256 approvals on properties worth £125,000 or less – 13% down on the 15,244 of July last year.
According to e.surv, July was the second successive month that house purchase approvals topped 66,000, suggesting that the market is adjusting to the implementation of the Mortgage Market Review.
In May, the first full month of MMR, there were just 62,007 house purchase approvals.
The firm also notes a healthy rise in first-time buyers – in line with the Council of Mortgage Lenders, but at odds with the NAEA's claim that buyers under the age of 30 have fallen to an all-time low and constitute just 3% of all purchasers.
E.surv says that the number of first-time buyers in the first half of this year was up by 30,000 compared with the first half of last year.
Richard Sexton, director of e.surv, said: “The market is awash with first-time buyers keen to get on the property ladder before prices climb any further upwards.
“Many of them fall into the high LTV category because they simply cannot build a large deposit whilst savings rates remain low and wage growth remains weak.”
However, the MMR may continue to affect the housing market, the Bank of England warned yesterday – and buyers of pricier homes may fail affordability tests.
The Bank said: “A number of factors may account for weak mortgage approvals in the early part of the year. The MMR, which was carried out by the Financial Conduct Authority to improve the functioning of the mortgage market, could have weighed on approvals as banks introduced new processes or trained staff.
“Those temporary constraints may now have started to ease, but the MMR could also have more persistent effects if it affects the availability or terms of credit for some borrowers.
“In that case, it could take time for those borrowers to adjust their expectations and to find a property that they can afford.”