Mortgage market recovering with 13% growth since August

Mortgage market recovering with 13% growth since August

23 December 2009 / by Rachael Stiles

The number of mortgage products available on the market has increased by 13 per cent since August, according to analysis from moneysupermarket.com.

This August saw the number of mortgages hit a low point, falling by 40 per cent since January, from 3384 to 2182, but the new statistics show that things are looking up in the mortgage market.

Although there are still 27 per cent fewer mortgage deals to choose from compared to January, there has been a steady recovery in the number of mortgages available since August, to stand at 2430 in December.

Mortgages might have become more plentiful in recent months, but it is a long way off from the dizzy heights of 2007 and 125 per cent mortgages. As lenders have tightened their criteria, the 95 per cent mortgage has suffered more than most, with the number of products available falling by 75 per cent in 2009.

For those with a 15 per cent deposit, however, the market seems markedly improved compared to January, with 85 per cent loan to value mortgages seeing the most significant increase, growing by a third this year.

Hannah-Mercedes Skenfield, mortgage manager at moneysupermarket.com, said that the four consecutive months of sustained growth in the mortgage market suggest "we could be on the long road to recovery."

While a lack of supply has stunted recovery in the mortgage market, first time buyers have been denied footing on the housing ladder, with the best mortgage deals being made available to borrowers with significant deposits.

But, the growth in the 85 per cent LTV market "is therefore particularly encouraging," Ms Skenfield said. "For many consumers the real difficulty in getting on the property ladder is in scraping together a deposit. Because of the financial crisis lenders became obsessed with equity to the point where affordability became a secondary consideration."

Following a "stalemate" in the mortgage market caused by a lack of high LTV deals, she continued, "the growth in higher LTV deals suggests this equity obsession is dying out a little."

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