Home buyers have received some long-awaited good news as mortgage approvals for house purchase increased for the first time in three months, banks claim – but are they being driven by the return of 100% deposit “supersized mortgages?”
Lending data from trade body UK Finance shows mortgage approvals for house purchase were up 3.6% annually and 21.2% on a monthly basis to 45,289 during October.
Lending to home buyers had been falling since July 2018 and hit a six-month low in September.
The boost seems to have come at the expense of remortgaging, with approvals in this area down 13.5% year-on-year to 33,505.
The value of gross mortgage lending across the market in October was up 5.6% to £25.5bn.
It comes amid reports of the return of controversial “supersized mortgages,” which require little or no deposit and were seen as a cause of the 2008 financial crisis.
Comparison website Moneyfacts lists 16 different 100% loan-to-value mortgages that don’t require any deposit but do need a guarantor, which is usually a family member or a charge placed on another property or someone’s savings.
Bank of England data shows that a quarter of mortgages are now for 4.5 times someone’s salary or higher, compared with a fifth just three years ago.
Debt charities and mortgage brokers have warned it is important that borrowers aren’t stretched too far.
However, UK Finance doesn’t seem concerned.
A spokesman told the Daily Mail: “High loan-to-income mortgages are only likely to be available to those who have good prospects for wage increases, such as those in certain professional roles.
“Before they are able to offer any mortgage, lenders must undertake a strict affordability assessment in accordance with the rules outlined by the regulator.” https://www.dailymail.co.uk/news/article-6427491/Supersized-mortgages-back.html