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First-time buyers benefit from mortgage increase

Friday, 10 February 2012 10:04 AM

Mortgage approvals surged to their highest level since the end of 2009 in January, according to the latest mortgage monitor from e.surv.

The chartered surveyor said there were 56,610 loans for house purchase in January, an increase of 11 per cent on December and 29 per cent on a year ago.

It said the increase reflected more loans to first-time buyers and customers with low deposits.

Loans to borrowers with a deposit of under 15 per cent rose from seven per cent of the total in January 2011 to 13 per cent in January 2012.

Meanwhile there were 15,329 loans for purchase of homes below £125,000, a price point suiting first-time buyers. That was a 31 per cent increase on last January and the highest number since March 2008.

The figures also suggest that wealthy buyers are starting to take a disproportionate share of the market. The number of loans fell in all price brackets over £376,000.

Richard Sexton, director of e.surv, said the mortgage market had proceed resilient in the face of the Eurozone crisis and more loans were feeding through to first-time buyers but he warned that this would not last forever.

He went on: "The rate at which banks lend to each other – LIBOR – has been creeping upwards. The banks are yet to pass these extra costs onto the consumer, but this is sure to happen, and will come in the guise of higher mortgage rates.

"If the situation in the eurozone becomes more tumultuous – which looks possible – lenders will batten down the hatches and scale back the amount they lend to first time buyers."

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