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Boom in low deposit mortgages

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The number of mortgages given to those with smaller deposits has grown significantly in the last year, figures from e.surv have shown.

More than 10,000 house purchase loans made by high loan-to-value borrowers were approved during April, a rise of 7.3% on last year.

Lending to these borrowers represented 16.3% of house purchase approvals in the month, 1.4 percentage points higher than a year ago.

In Yorkshire and the North West the proportion of low deposit loans was even higher, accounting for more than a quarter of all house purchase loans.

The number of approvals across all house purchase loans was down by 1.9% year-on-year, suggesting first-time buyers are keeping the market moving at present.

Richard Sexton, director of e.surv chartered surveyors, said low rates and better mortgage availability was helping young buyers purchase a home.

“Borrowers with smaller deposits are making a welcome comeback, thanks to increased accessibility in lending, improving wages and highly attractive mortgage rates,” he said.

“This revival of the bottom of the market is becoming ever more crucial – and this showed in the recent election struggle, with all the main parties placing helping first-time-buyers as one of the crucial components of their campaigns.

“However, before concerns are raised regarding the increase in higher LTV lending, it’s worth putting these numbers in context. The number of higher LTV house purchase approvals is still only a quarter of what it was in 2007. This is a healthy upturn in higher LTV lending, not a symptom of any malady in the mortgage market.

“David Cameron has outlined a plan to provide 200,000 cut-price starter homes, alongside a commitment to unlocking brownfield land for building new homes. This is the kind of clear planning the property market needs – it is to be hoped that the proposals crystallise into real policies.”


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