A recent report has claimed that mortgage lenders are favouring richer consumers, resulting in home loan approvals falling for the second month in a row in October, as lower income consumers continue to struggle to get finance for purchasing a home. Almost all of the mortgages that were approved are said to have been extended to those with larger deposits and higher incomes with only 1 percent of approvals going to those with a deposit of 10 percent or less.
There was a fall in the number of house purchases approved, which fell from 50,967 in September to 50,382 in October. Many believe that this decline is down to increased stringency when it comes to lending criteria. The average size of deposit for October was said to be a whopping 40 percent. There was a drop in the number of loans for purchases of under £250,000, which fell from 36,187 to 35,772.
The data indicates that those with lower deposits and lower incomes, such as first time buyers, are once again being frozen out of the picture by lenders, who are more keen to lend money to those with massive deposits and higher incomes. Less than 10 percent of approvals for October went to those with a deposit of 15 percent or less compared to a quarter of approvals for the same month in 2007.
One industry expert said: “Lenders are in no position to begin growing their loan books in the current climate, although noises coming from some sections of the market would have you believe otherwise. Banks are becoming more cautious, they are now focusing on wealthier borrowers. It looks like they are still pushing low deposit mortgages out, but the truth is the criteria are so strict, most first time buyers aren’t eligible. These tightening credit conditions are threatening to widen the vacuum at the bottom of the market.”
Tags: 10 percent, industry expert, home loan approvals, mortgage lenders, data indicates that, massive deposits, loan books <BR/>
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