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More first time buyers securing mortgages

More first time buyers securing mortgages

Category: Mortgages

Updated: 13/05/2011
First Published: 13/05/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

More first time buyers are managing to find their way onto the property ladder as mortgage lenders start to loosen their deposit requirements.

The good news comes after e.surv noted an increase in the amount of cheap properties purchased last month.

Properties with a value below £125,000 accounted for over a quarter (27%) of all mortgage approvals in April compared to only 20% a year earlier.

Almost four in five (79%) approvals during the month were for homes under £250,000, up from 71% in April 2010.

The research showed lenders have increasingly been relaxing their borrowing criteria, allowing more first time buyers to fulfil their home ownership dreams.

More high loan-to-value (LTV) mortgages are being introduced to the market, with the proportion of mortgage approvals in the highest LTV brackets rising significantly compared to October 2010.

Indeed, purchase volumes increased in the 85% to 90% LTV bracket at almost three times the pace of the rest of the market.

The average LTV for properties under £125,000 in April was 68%, compared to 64% in April last year.

According to recent research, rates on mortgage deals requiring a 10% deposit have this week fallen below 6% for the first time since March 2008.

The average rate on a two year fixed rate mortgage at 90% loan-to-value (LTV) currently stands at 5.98%.

It was also revealed that 229 such mortgage deals are available at present, 41% more than a year ago.

HSBC and Yorkshire Building Society are amongst the lenders willing to lend to borrowers with just a 10% deposit, while Woolwich and first direct have mortgage deals open to those with a 15% deposit.

Richard Sexton, business development director of e.surv, said that with renting so expensive, first time buyers are realising home ownership is the more attractive option, especially with lenders now keener to offer fixed rate deals.

"Lenders are looking to bring in new business after a remarkably sluggish winter period," he added.

"They have tentatively offered high LTV products for some time, although their criteria have been so tight that few borrowers qualified.

"This is slowly starting to change. First time buyers are the lifeblood of the market – their purchases unlock the rest of the property chain – so these signs of life at the bottom of the market will be welcomed by the higher echelons of the property ladder."

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