Friday, 15 June 2012 8:57 AM
Pressures from the Eurozone forced banks to scale back their lending and cut the number of mortgages for borrowers with small deposits, according to e.surv’s latest mortgage monitor.
The chartered surveyor said new home loans fell 2.5 per cent in May to 50,525, with first-time buyers hardest hit by the tightening lending conditions.
The figures were published as the chancellor and Bank of England revealed new emergency measures to boost bank lending by £80bn.
Loans for a typical first-time buyer property (under £125,000) fell to 11,307 in May. That was the lowest level since July last year and down three per cent from April.
Meanwhile the number of house purchase loans to borrowers with a deposit of less than 15 per cent fell 2.5 per cent to 5,457 in May.
Just 1,213 of these loans were to people with a deposit of less than 10 per cent. That was a fall of 15 per cent on April.
E.surv says the market has begun to regress steadily after a recovery over the winter. After hitting record lows in the autumn, rates have crept upwards in the last few months and banks have restricted lending to borrowers with small deposits.
In the fourth quarter of 2011, there were an average of 6,670 loans to people with a deposit of less than 15 per cent. In the last three months the average has fallen to just 5,421 per month. To put that in perspective, there were 39,051 loans like this in May 2007.
Overall house purchase loans were up 8.7 per cent year-on-year in the 12 months to May but the total for month was still low by historic standards.
Richard Sexton, business development director of e.surv, said: “It’s certainly not all doom and gloom. Lending levels can’t fall much lower than they already have. But the growth prospects for the mortgage market are tied inextricably to events in the eurozone. Lending won’t recover with any conviction until the turmoil eases. The fortunes of the mortgage market over the coming months will be closely linked to decisions made in Brussels, Athens and Berlin.”