High loan to value mortgage lending is up almost 4% from the first quarter of the year, regardless of the type of home loan – original for purchase or remortgage.  It has even increased during the quarter more than 2% over the fourth quarter of last year.  Those close to the housing market are blaming the increase on the Help to Buy scheme which went into effect last year and is still going strong.

Vice President of mortgage insurance for Genworth, Simon Crone, commented on the increased number of high loan to value loans, saying: “The jump in high loan to value lending shows the Help to Buy mortgage guarantee is doing the job it was designed for by reviving this part of the market.

“Even so, it is wishful thinking to expect that the outlook for first-time buyers will be permanently improved by a temporary fix in a market whose mechanics have fundamentally changed since the recession.”

Crone added: “First-time buyer lending still amounts to just 22% of activity when it once averaged 40%, so it is no surprise that owner-occupation has suffered as a result.”

Paul Hunt, managing director at Phoebus Software, commented on the behaviour of the market following a slight pull back which took place a few months ago, saying: “Despite increasing amounts of regulation the mortgage market is definitely undergoing a bounce back.

“The value of loans has increased every quarter for the last four and the number of gross advances has the highest amount advanced in the second quarter of a year since Q2 2008.”

Hunt continued: “The mortgage market is incredibly resilient. Despite ongoing regulatory changes the appetite for loans is continuing to increase and lenders’ ability to cope with this demand is holding up well.

“While we have interest rate rises, the European Mortgage Directive and a general election around the corner, I expect that these numbers will continue to rise.

“Lenders’ appetite for risk has increased despite the MMR as evidenced by the increasing amount of loans at above 90% LTV and the increase at high income multiples, but this appears to be justified by falling arrears figures both for new and existing arrears.”