Increase in first-time buy activity

Your Move estate agents has reported a 32 per cent increase in the number of high ‘loan to value’ mortgages taken out by its customers in past month.

And it says much of the activity has been from first-time buyers who had previously struggled to enter the property market.

High loan to value mortgages offer customers a higher loan amount compared to the value of the property, which often means that less deposit is required.

Last month Your Move saw a marked increase in mortgages at 90 per cent loan-to-value which was welcome news for those who previously feared they may have to raise tens of thousands of pounds for the deposit alone.

For example there was a two year tracker mortgage – which works by ‘tracking’ the Bank of England base rate over time – with just a £995 fee and an APR of 5.2 per cent.

There was also a five year fixed rate deal at 5.99 per cent and an APR of 5.4 per cent with a £199 fee and no charge for early repayment of the mortgage, meaning a customer could remortgage at anytime.

The news follows recent reports that properties under £125,000 – often considered to be first time buyer properties – accounted for 23 per cent of all mortgage approvals in May 2011 – up from 20 per cent in April 2010.

It confirmed news from Mortgage Brain which showed that the number of products with a LTV of 80 per cent or more has increased by 35 per cent over the past six months.

Paul Flitter, for Your Move in Chesterfield, said: “Obviously this is great news for first time buyers who would otherwise have found it hard to enter the market and also for those who have been looking to escape the rising costs of renting.

“With interest rates unlikely to rise this year and with property prices generally much lower than in recent times it obviously makes sense that people consider making a move now.

“The added advantage is that the cost of a house is becoming cheaper relative to prices and incomes so although house prices remain essentially static, property is actually becoming much more affordable.

“Hopefully the emergence of more high loan-to-value mortgages will improve market activity greatly, we simply need even more lenders to offer such products and then for buyers – and sellers – to react accordingly.”