Loan To Value Ratios Increase
One of the biggest factors which has been holding back the housing and home owner loan markets over the past couple of years has been that of the low loan to value ratios offered by banks and building societies, particularly for first time buyers who are trying to get their feet on the first rung of the housing ladder.
The credit crunch and banking crisis, has made lenders extremely cautious about offering loans to anyone and as a result of this, many would be buyers have been priced out of the home owner loan market, simply because they did not have a large enough deposit.
But the latest National Mortgage Index from the Mortgage Advice Bureau, has shown that the average loan to value has increased steadily over the course of the year so far. July this year saw the average loan to value on home owner loans and mortgages, increase above 70 per cent for the first time in several months.
According to the figures, the average loan to value increased to 71.1 per cent in July, from just 67.5 per cent in the previous month, which is good news for those buyers who are struggling to raise sufficient deposit.
The average size of a home owner loan has also increased from £130,609 in June, to £139,404 in July. This is the highest the average loan size has been since before the credit crunch hit the UK back in 2007.
Brian Murphy of Mortgage Advice Bureau said “Rising average loan to values, of 71.1 per cent in July are confirmation of growing competition among lenders and a renewed appetite to lend. On a regional level, there is a great variation in average loan to values across the ten regions, with average loan to values rising in three regions and falling in seven regions.”
