Home purchase approvals fall for second successive month
Friday, 11 November 2011 11:51 AM
Approvals for home purchases fell for the second successive month according to the e.surv mortgage monitor.
There has been a 1.1 per cent decline in October, triggered by the tightest lending conditions seen since earlier this year in February.
Mortgage lenders are focussing attention on wealthier borrowers with bigger deposits. Loans with 10 per cent deposits or under now account for just one per cent of total lending.
Purchase approvals are falling fastest in the cheapest property brackets, with lower income buyers struggling to meet the criteria for high loan-to-value products.
Richard Sexton, director of e.surv, described credit conditions as "sclerotic" and pointed to "intense pressure" on banks over capital.
He said: "Banks are now focusing on wealthier borrowers. It looks like they are still pushing high LTV mortgages, but the truth is the criteria are so strict, most first time buyers aren't eligible. These tightening credit conditions are threatening to widen the vacuum at the bottom of the market.
"That vacuum is being filled by wealthier buyers and buy-to-let investors, who are propping up the figures. They are being seduced by excellent value fixed rate mortgages and high rental yields.
"Lenders are now falling over themselves trying to offer the lowest fixed rate deals, which is great news for borrowers who can build the deposit required to access these great rates."
The number of loans for properties over £375,000 remained stable due to the greater immunity of wealthier buyers to the difficult lending conditions.
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