Average Home Loan Deposit Increases
As banks and building societies continue to tighten their lending criteria on mortgages and home loans due to the effects of the credit crunch, the amount of deposit required by someone looking to buy a house has increased once again, whilst the average income multiple which has been granted on a new home loan has decreased.
The latest figures from the Council of Mortgage Lenders (CML) show that, on average, a person buying a new house put down a deposit of 22 per cent during the month of June, an increase of 2 per cent on the previous month. The average loan size has also reduced against earnings levels, with someone moving house borrowing an average of 2.94 times their income, as opposed to 2.94 times last month. For first time buyers this figure was slightly higher, with an average of 3.33 times income compared with 3.35 times in May.
Overall, the total amount of loans granted in June fell by 4 per cent from the figure in May to £23.6 billion, but new loans are down by 32 per cent on the same time last year. The most healthy area of the mortgage market remains in the re-mortgaging sector, which is no real surprise as a large number of borrowers are reaching the end of their fixed rate cheap loans and being forced to look for an alternative deal. Re-mortgage deals accounted for 44 per cent of all mortgage business in June, with a total of 75,000 individual loans being granted, for a value of £10.3 billion.
Bob Pannell of the CML said “Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand. The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market.”
