Mortgage approvals surged in June – but only so that the banks could meet their half-year lending targets, according to a new report by one of the country's leading surveying firms. The underlying picture, says e.surv, is one of continuing weakness, and indeed a mortgage market growing even tougher for first-time buyers.
Based on some 21,000 residential property valuations, about 45 per cent of the total market, e.surv estimate that approvals were up 6.7 per cent between May and June, with banks anxious to meet their planned lending targets, making up for depressed activity earlier in the year.
But first-time buyers are making up a steadily shrinking proportion of total lending, as banks remain cautious about risk. Those getting their first foot on the housing ladder accounted for only 22 per cent of approvals in June, down from 23 per cent in May. This contrasts to early 2008 when they accounted for 30 per cent of all approvals. Approvals rose fastest in London, which saw a 12.3 per cent increase, reinforcing the capital's increasing disconnect from the rest of the UK market.
Restrictive criteria on some new high loan-to-value mortgage products meant few low-income first- time buyers were actually able to qualify, e.surv said.
Richard Sexton, the business development director of e.surv, said: "Lenders still have to deal with significant risks to their balance sheets so, after a concerted effort to meet lending targets for the first half of the year, the next few months could see a return to a lower level of activity as they ration funds cautiously in the third quarter."