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Strongest July for house purchase lending since the economic downturn

The UK has seen the strongest July for house purchase lending since the beginning of the financial crisis a new report has found. According to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor, banks increased lending to high loan to value borrowers during July of this year.

High LTV lending almost hit a record for being the highest since the financial crisis of 2007. The data shows that it was 56% higher than the figures from last July and 6,946 loans were given to borrowers with a deposit of less than 15%. This is in comparison with the 4,446 loans advanced to borrowers in July 2012. There were also more house purchase approvals in July of this year. There was an increase of 21% in house purchase approvals when compared to July 2012 which makes it the strongest July since 2007.

There were 12,989 loans approved in July for properties worth up to £125,000, typical first time buyer housing. In comparison, there were 10,763 loans made on these properties in July of 2012. This is in spite of the recent rise in house prices. Although the amount of lending has increased on an annual basis, there has been a slight decline in house purchase lending on a monthly basis. From June to July it decreased by 2% indicating that the improvement in the housing market is beginning to level out. This may be due to the significant rise in inflation accompanied by weak wage growth. Many of those still trying to get on the property ladder are struggling to save for a deposit. This means that several house buyers are unable to take advantage to the increase in mortgage availability.

The new figures do indicate that the north/south divide is narrowing as the recent increase in high LTV lending has been focused in the North. Approximately 24% of all house purchase loans in July were to high LTV borrowers in the North East and Cumbria, closely followed by the North West with 23% and Yorkshire with 20%. However, some areas are still struggling to gain access to high LTV mortgages. The number of loan approvals in London and the South East remains low when compared to the North.

Figures have previously shown that the mortgage recovery has primarily been focused on the South and in London, but these new figures suggest that the recovery is reaching other regions and is spreading nationwide.

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