Lighter lending criteria has helped first time buyers purchase more properties during the month of August.  The number of mortgage approvals with a loan to value of at least 85% hit a peak for the year last month.  Approvals of that type accounted for more than 10% of all approvals, according to e surv.  High loan to value approvals grew at twice the pace as other parts of the market during the month of August.  Loan to Value is the ratio of the amount a lender is willing to extend to a borrower compared to the value of the property being purchased. 

The results of last month’s activity are encouraging, but e surv stated it should not be taken as promising of the start of a recovery.  The one thing which can be taken from the increase in high loan to value mortgages is a number of lower income buyers have been injected into the active housing market.  There was an increase in purchases across the entire range of homes with a price tag of below 750,000 pounds.  The biggest increase was in approvals for properties worth a maximum of 125,000 pounds.

The London market finally hit a slowdown month.  Fuelled by a slow month in the purchase of high priced property, the Capital City experienced a decrease in total approvals of 10% when compared with July.

Richard Sexton, business development director of e.surv, commented on the monthly approval figures for August, saying: "The uptick in high LTV lending is encouraging, and lenders may still be trying to garner market share. But we shouldn't get too carried away and begin hailing this as a portent of long-term recovery.

"High LTV lending still lags well behind the levels we saw back in 2008 and a slight loosening in criteria only makes a small dent in the vast backlog of buyers stuck in the rental market."

He added: "For those who can get mortgages, the good news is that fixed rate deals seem certain to remain particularly cheap.

"The UK has been like a fortress in repelling the international economic contagion, which is good news for borrowers as it means repayment rates will stay low for some time to come."