According to new research, home purchase lending increased by 10% in October compared with September, due to increased mortgage availability through the Funding for Lending Scheme. The latest Mortgage Monitor, which is produced by e.surv, a chartered surveyor, has revealed that 54,713 home purchase loans during October, the highest figure since January and the second highest since the peak of December 2009.
When compared with October of 2011 this represents an increase of 4%, and brings to an end a run of 4 consecutive months of negative growth which dates back to May. This rise in lending has been attributed to the increase in mortgage credit availability for lenders, mainly due to the government backed Funding for Lending Scheme.
Lenders themselves have reported a 36% increase in mortgage credits for the fourth quarter, which is the biggest increase for a single quarter since records began, and this has in turn encouraged banks to increase their volume of lending and brought more competition into the market via new products. More applications for loans were accepted in October, and lenders predict a 6% increase in approvals during Q4 compared with Q3.
Richards Sexton is a business development director from e.surv, and he has said that once January of this year had been discounted when there was a flurry of interest to get in before the stamp duty holiday ended, lending is as strong now as it has been since December 2009. He added that this was an indication of the mortgage market finding its feet again, and he believed this was due to the Funding for Lending Scheme.
The increase in the lending was spread pretty equally across the different bands of LTV, which indicates that lenders still don’t quite have the confidence to use the improvements offered in mortgage credits to totally focus their lending on borrowers with the highest LTV. 90% of home purchase loans during October were for LTV’s of 85% or less, similar to the loans approved in September and Q3.