“There were 6% fewer mortgages approved by banks in September 2011. Recent growth in the mortgage market has been attributed to Buy to Let loans. With higher rents and strong demand, clearly lenders prefer to back private Landlords!” Alison O’Connor

Article Source: The Estate Agent

Banks approved 6% fewer house purchase mortgages in September than in August, with 17,000 would-be first-time buyers left out in the cold.

The figure of 33,130 house purchase approvals was, however, 8% higher than in September last year.

Figures from the British Bankers Association show that the number of remortgage approvals in September was also down on the August figure, by 8%, although about the same as in September 2010.

Despite the monthly dips in new approvals, banks’ gross mortgage lending totalled £8.4bn in September, up 7% on September 2010.

The BBA reports that growth in gross mortgage activity is being driven by the buy-to-let market.

David Dooks, statistics director, said: “A modest stimulus to gross mortgage lending is coming from the buy-to-let sector as rental yields continue to improve.”

Jonathan Moore, director of online rental accommodation website Easyroommate, said: “The recent improvement in gross lending may seem like welcome news to buyers, but the increase has more to do with buy-to-let landlords taking advantage of the current rental market than a much-needed surge in lending to first-time buyers.

“Strict lending criteria and absurdly high deposit requirements are continuing to keep mortgage finance out of the hands of the average first-timer, and this is flooding the private rented sector with demand.

“Each month there are 17,000 more frustrated buyers than before the downturn having to rely on rental accommodation because they are unable to buy.

“This is driving up competition for accommodation in both the flatshare sector and the wider rental market. For many investors, these conditions are too attractive to ignore, and we are seeing growing investment in buy-to-let.

“While this may well alleviate some of the pressure on the current stock of rental homes, the supply will have to increase at a much faster rate to match growing demand and limit further rent rises.”  

Moore based his claim of 17,000 first-time buyers per month being left out in the cold on Council of Mortgage Lenders figures.

The CML says that in the 12 months to August an average of 15,800 first-time buyers a month secured mortgages, compared to an average of 33,100 a year between 2002 and 2007.

Richard Sexton, director of valuation firm e.surv chartered surveyors, said: “The mortgage market is doing its best to stagger on.  

“The ailing economy is entering a state of rigor mortis, and the crisis afflicting Europe makes any resurrection of growth look unlikely.  

“The temptation for lenders to pull back from the market and recoup equity over the winter is becoming overwhelming.  

“First-time buyer numbers have fallen to their lowest since November 2010, and purchase approvals with a deposit of 25% fell to their lowest level in six months in September, both of which are tell-tale signs of a struggling mortgage market.  

“Supply of credit is painfully restricted, meaning there is almost no margin for lenders to grow their loan books, so they are being understandably cautious and focusing on targeting borrowers with big deposits.”