MortgagesDec 14 2015

Mortgage deposits keep rising as prices soar

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Mortgage deposits keep rising as prices soar

Mortgage deposits are being pushed up by rising house prices rather than lenders insisting on lower LTVs, according to data from the Mortgage Advice Bureau.

The MAB figures show that average deposits rose in nine out of 11 regions in October.

The average purchase deposit reached £71,301 – a monthly increase of 0.9 per cent and an annual rise of 3.5 per cent.

But according to data from the CML, LTV ratios have remained broadly similar – in the mid-70s – meaning the increase represents house price rises.

Brian Murphy, head of lending at MAB, said: “George Osborne’s Autumn Statement hammered home the government’s support for home-ownership, with several policies aiming to improve both the supply and affordability of homes.

“This is sorely needed in the capital, where house prices remain much higher than in the rest of the country and saving up for a deposit can seem an impossible task. However, with average deposits rising across the UK, support is needed nationwide.

“The extension of the help-to-buy scheme for another year will give first-time buyers a longer window to buy with a 5 per cent deposit and can be used in conjunction with the help-to-buy Isa for an additional boost to deposits.”

The largest monthly increase in average deposits was in East Anglia, where typical deposits rose 11.6 per cent month-on-month from £46,504 to £51,877. This was a 26.6 per cent increase on October 2014.

Average deposits remain highest in London, where they have risen from £170,328 in September to £179,248 – an increase of 5.2 per cent.

But according to CML data, the average LTV ratio has stayed between 73 and 76 per cent since 2008 – in fact, the average LTV on all house purchases has been 75 per cent for the past four years.

A spokesman for the CML said: “LTV ratios are broadly unchanged but the amount advanced has increased, which would appear to reflect the growth in house prices.

“The obvious answer to this is to increase housing supply. Lenders have to continue to lend responsibly and in a way that’s affordable for the borrower.”

Adviser view

Toby Keate, a financial adviser with London-based Taylor James Financial Services, said: “I see very few clients using the help-to-buy scheme because it just doesn’t work for them. The majority of my young clients are getting money from their families.”