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November sees highest volume of approvals for almost six years

The volume of home loan approvals in November reached 71,920 – the first time the monthly figure has exceeded the 70,000 mark since January 2008, according to surveying giants e.surv.

The figure represents a six per cent increase on October and a 34 per cent rise from November 2012’s figure of 53,539.

E.surv says the second phase of the Government’s Help to Buy scheme appears to be having an effect on the housing market as 13 per cent of all house purchase approvals were to high LTV borrowers – those with a deposit of 15 per cent or less.

There were a total of 9,493 high loan-to-value loans in November this year – almost double the total in November 2012, when 4,872 high LTV advances were approved.

The southern region of the UK saw a strong rise in total lending, with November home loan approvals in London jumping nine per cent from October. A total of 827 high LTV loans were made in London during November – a 30 per cent spike from the previous month.

Elsewhere, all regions in the UK aside from Northern Ireland, the South West and South Wales showed increases in total lending.

E.surv director Richard Sexton says: “Help to Buy is taking up the mantle as Funding for Lending is phased out. It is an essential component in the nationwide recovery in lending.

“But as lending to borrowers with smaller deposits increases, so does the risk of them defaulting on their mortgages, as rates rise. And with unemployment falling, a base rate rise could happen sooner than expected.

“A base rate rise of up to 1 per cent at the tail end of 2014 could be very realistic if the economy keeps recovering.  To combat this, lenders will inevitably increase stress testing, to ensure that loans are only issued to borrowers that can really afford them. Credit should be more accessible, but lending must be increased in a responsible manner to avoid revisiting the mistakes of the past.”

Extract from MortgageStrategy Thursday Dec 5th 2013

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