Fewer first time buyers got onto the property ladder in May, according to analysis by e.surv. It put this down to a tightening of lending criteria.
Purchase approvals for homes under £125,000 – typical first time buyer property – accounted for only 23% of all purchase approvals in May, compared to 27% in April, and below the average for the last year (24%).
E.surv found that purchase approvals rose steadily in the highest price brackets because wealthier buyers are less affected by tightening lending criteria. As a result these buyers continue to secure a disproportionate share of mortgages.
The overall average LTV for mortgages approved in May fell slightly from 61.0% in April to 60.4%, reversing a seven month trend of improvement. The tightening of lending conditions was most pronounced at the bottom end of the market where LTVs decreased or remained flat on all house price bands up to £376,000. The average LTV for first-time buyer properties under £125,000 fell more sharply from 67.8% in April to 67.1%, meaning fewer low income buyers were able to secure a mortgage.
Purchase volumes in the 90% to 100% LTV bracket, typically needed by first-time buyers, grew at less than half the pace of the overall market.
Purchase approvals as a whole rose 1.1% in May driven by higher value homes, up from 45,166 in April to 45,675. Nevertheless, they are still down 7.9% on May 2010 during the mini-boom in the housing market before the election.
Richard Sexton, business development director of e.surv said: “With base rate hikes seemingly off the agenda for at least another six months
