First-time buyers mortgage approvals fall on eurozone fears

Permalink: First-time buyers mortgage approvals fall on eurozone fears
by Gill Montia

First-time buyers were hard hit by tighter lending conditions in April, as loans for new buyers dropped to their lowest level for nine months.

According to e.surv, part of the LSL Property group, mortgage approvals for house purchases fell to 49,165 last month, with the average deposit requirement rising to 40% as renewed fears over the eurozone spooked lenders.

The housing valuation firm also reports that approvals on typical first-time buyer properties (worth up to £125,000) declined to just 11,307, with the figure falling 5% on March and 1.2% year-on-year.

Loans to borrowers with a deposit of 15% or less totalled just 5,309 in April, well below the three-month average of 6,229, but banks lent more happily to wealthier buyers and approvals in all price brackets over £350,000 increased.

e.surv business development director, Richard Sexton, comments: “we’ve reached a tipping point now. Banks and building societies can’t afford to sustain their current levels of high loan-to-value lending.

“In addition to their increased funding costs, they are also concerned about their exposure to the debt-riddled European countries, and the increasingly precarious state of borrower finances in the UK.”

According to Mr Sexton, lenders will be forced to continue to raise the bar for first-time buyers into the early summer.