House purchase lending in November increased to its highest level since January, according to research by e.surv chartered surveyors.
The slight improvement was due almost entirely to an increase in lending to wealthier buyers. First-timers struggled in November, with purchase approvals on property below £125,000 accounting for just 22% of overall house purchase lending, the lowest proportion for 14 months.
Meanwhile, banks focused on lending more to wealthier buyers. House purchase loans rose on all property valued at over £500,000, particularly in the £500,000 to £750,000 range.
Moreover, lending to borrowers with small deposits slipped to its lowest since July 2011. Loans to borrowers with a deposit of less than 15% accounted for just one in eleven of total house purchase loans in November. Overall, lending to borrowers with a small deposit fell by 33% compared to last November, with 4,847 loans compared to 7,180 last year.
Richard Sexton, business development director of e.surv, said: “The slight improvement in overall lending glosses over the ongoing struggles of first-time buyers. High loan-to-value lending is a third lower than it was this time last year which suggests things remain challenging for new buyers. Mindful of their risk profile and capital adequacy requirements, lenders appear to be focusing increased lending on relatively wealthy borrowers.
"Although banks’ can access cheaper funds to use for lending, they’ve kept criteria tight on mortgages for first-time buyers. Although rates have fallen on some of these mortgages, lenders still require big deposits to access them, which means first-time buyers who couldn’t qualify for a mortgage three months ago are still no better off."