House purchase lending dropped towards the end of 2015, according to the latest mortgage monitor from chartered surveyor E.surv.
A lack of supply in some areas has been suggested as a likely component in these reduced loan numbers.
Overall house purchase approvals, on a seasonally adjusted basis, decreased to 68,218 in December – falling 3.1 per cent month-on-month from 70,410 in November.
This slight dip comes as pressures of supply, higher prices and recent legislative measures are thought to be impacting upon the property market.
But the second half of the year saw a strong monthly average of 69,572 approvals, compared to 64,047 across the first six months of 2015, as lenders showed support for credit-worthy borrowers.
Annually, house purchase lending has risen 12.5 per cent since November 2014, when loans totalled 60,650.
Richard Sexton, director of E.surv, said supply issues have become more of a factor in some areas, as both growing demand and house prices finally got some attention from the government, “but limited choice of affordable homes is certainly proving a challenge to some buyers”.
He added that 2016 looks set to bring challenges and opportunities for lenders, with the Mortgage Credit Directive and a potential interest rate change on their radar.
As further evidence lenders maintain an appetite for credit-worthy borrowers, small-deposit lending (to buyers with a deposit worth 15 per cent or less of their properties’ value) in December stood at the same proportion as the previous month – 16.3 per cent of house purchase approvals.
In absolute terms there were 11,120 small-deposit loans approved in December – marginally lower than 11,477 approved in November.
Despite small-deposit lending slowing overall towards the end of the year, on an annual basis there has been a rise of almost a third since December 2014, which saw 8,430 of such loan approvals granted.
Mr Sexton noted that in order to properly address supply shortages and champion first-time buyers, new entry-level homes need to be built as quickly as possible.
He said: “Any new approach from the government is a move in the right direction, with for example, the unlocked potential of brownfield sites now being fully investigated.
“Planning is now also coming under scrutiny, often cited as a common culprit for causing housebuilding delays.”
peter.walker@ft.com
