Mortgage blog: First-time buyer mortgage deals hit six year high

Posted 2 April 2014 by Keith Osborne

In a further sign that confidence is returning to the mortgage market, new data shows that the number of small deposit mortgages hit a six-year high in February. 11,000 mortgages worth 85% of the property value were approved in February 2014, the highest number since April 2008.

Keep reading to find out why more and more first-time buyers are getting onto the housing ladder.

Average loan-to-value of new mortgages rises 2%

Data from e.surv - the UK's largest chartered surveyor - shows that more than 11,000 loans of 85% or more of a property's value were approved in February. This represents a 74% increase over the same month in 2013 and the highest number since April 2008.

These high loan-to-value (LTV) mortgages represented one in six of all house purchase mortgages and helped push the average LTV ratio in February to 63.5% - its highest level since August 2007 when the housing market was at its peak before the global financial crisis.

The Council of Mortgage Lenders also recently reported that the number of first-time buyers taking out loans in January 2014 was up by over a third (38%) on the same month last year, and the average loan-to-value they were borrowing had increased from 80% to 82%.

Richard Sexton, the director of e.surv which undertakes valuations for more than 25 mortgage lenders, said buyers were keen to act before new lending rules come into force in April. "The new rules will demand rigorous stress testing of buyers and could make it more difficult to get on the ladder. We are seeing both banks and buyers pushing ahead with lending ahead of this cut-off."

Help to Buy credited with a rise in high-LTV mortgage approvals

While the number of 85%, 90% and 95% mortgage deals was already starting to increase in 2013, the government's Help to Buy scheme has helped to boost the number of low-deposit mortgages.

The scheme offers a taxpayer backed guarantee on high-LTV mortgages, encouraging lenders to offer 95% loans. Royal Bank of Scotland and Halifax were the first two lenders to offer these deals in October 2013 but other lenders have signed up since.

Keith Osborne, editor of, says: "It is very encouraging that lenders are approving more high loan-to-value mortgages. The amount of deposit that new buyers have to find is starting to fall although most people still have to find a 20% or 25% deposit to buy."

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