High LTV mortgage advances up 32% in 2011

The number of mortgages advanced at an LTV of 85% or more increased by 32% between 2010 and 2011, according to the latest mortgage monitor from e.surv.

There were 57,301 loans at an LTV of 85% or higher in 2011, up from 43,379 in 2010.

The data also shows that there were 12,343 approvals for purchase of property worth £125,000 or less in December 2011, up 25% on the 9,873 approvals in December 2010.

In the overall market, loans for house purchase in December were up by 19% year-on-year at 50,836.

The average deposit was 38% in December 2011, down from 41% a year before.

Richard Sexton, director of e.surv, says the market made a modest improvement in 2011, but when considered against the backdrop of the eurozone crisis and slow economic growth in the UK, it has shown real staying power.

He says: “Banks have made a concerted effort to increase the amount they lend to first-time buyers, which is reflected in the big jump in higher LTV lending, while they are also supplementing this with more lending to buy-to-let investors.”

But he adds that 2012 will be a difficult year as banks pass on the increased cost of funding to consumers, meaning a flat market looks like the best case scenario.