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First-time buyer LTVs hit 13-month high

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02/10/2012
The average loan to value (LTV) level for first-time buyers hit its highest level in 13 months during August, according to research by LSL Property Services.

The average loan-to-value ratio reached 81.48% during the month, considerably up on the 78.91% figure posted in July. This was the highest LTV level since July 2011.

However, the number of first-time buyers fell from 19,000 to 18,300 during August, although the figure was flat year-on-year.

The average purchase price for a first-time buyer hit £141,918, the highest figure since March’s Stamp Duty holiday inflated figure, while the average deposit required for a first-time buyer was £26,285.

David Brown, commercial director of LSL Property Services, said: “There are encouraging signs that lenders are relaxing deposit requirements, but it’s not translating into increasing first time buyer purchases.

“In fact, following a seasonal drop-off in August, first time buyer numbers are back to their level of a year ago.

“Lending criteria remains incredibly stringent, and lenders are cherry-picking those new buyers with the very cleanest credit histories and largest incomes, limiting the number of buyers able to take advantage of deals with the very highest LTVs.

“We may be seeing lenders begin to react to the Funding for Lending Scheme – but it’s crucial that cheaper finance reaches a much broader selection of new buyers to boost buyer activity and alleviate the pressure on the private rented sector.”

The survey also found that 94% of tenants said they wished to become a homebuyer, but only 7% expected to buy a property this year. The average first-time buyer was aged 29 with an income of around £36,000, slightly up on July’s figures.

Of August’s first-time buyer mortgages, 53% required financial support from friends or family to help fund a deposit or assist with mortgage payments.

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