Mortgage approvals reach 15-month high in August

Mortgage approvals for purchase hit a 15-month high in August, according to the latest e.surv mortgage monitor.

Approvals rose from 49,239 in July to a seasonally adjusted 49,566 in August, which was 4.3% higher than in August 2010.

E.surv attributes the rise to loosening lending criteria and an increase in high LTV lending.

Loans at an LTV of 85% or more accounted for over 10% of total approvals in August, a high for 2011.

Purchase approvals with a high LTV grew at almost twice the pace of the rest of the market in August.

Approvals increased on all price brackets below £750,000, with approvals in the price bracket up to £125,000 accounting for 24% of all approvals, the highest proportion since April.

In addition, the average LTV on the cheapest price bracket rose from 67% in July to 68% in August.

Richard Sexton, business development director at e.surv, says: “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 adds that the larger lenders still have their hands tied by weak economic growth and tough capital requirements, and says that in practice lenders can do little to grow loan books while under pressure on capital.