House purchase lending in November increased to its highest level since the start of this year, but first-time buyers still lost out as lenders wooed richer borrowers.
The forecast has come from national valuations firm e.surv, part of LSL, which bases its predictions ahead of official statistics using its own data.
The firm predicts there were 53,259 house purchase loans in November, the highest since January.
But e.surv says the improvement was ‘modest’ and due almost entirely to an increase in lending to wealthier buyers. It also says that despite the improvement, it was the third weakest November for house purchase lending since records began in 1993.
To underline the lack of improvement in the long term, lending was 10% lower than November 2009.
It says first-timers struggled in November, with purchase approvals on the cheapest property (below £125,000) accounting for just 22% of overall house purchase lending – the lowest proportion for 14 months.
Instead, banks focused on lending more to wealthier buyers. House purchase loans rose on all property valued at over £500,000, notably in the £500,000 to £750,000 bracket.
E.surv says that despite the Funding for Lending scheme, the cheaper funds have so far failed to translate into an improvement in first-time buyer lending.
Richard Sexton, business development director of e.surv, said: “The slight improvement in overall lending glosses over the on-going struggles of first-time buyers. High LTV lending is one third lower than it was this time last year, which suggests things remain challenging for new buyers. Mindful of their risk profile and capital adequacy requirements, lenders appear to be focusing increased lending on relatively wealthy borrowers.
“Although banks can access cheaper funds to use for lending, they’ve kept criteria tight on mortgages for first-time buyers. Although rates have fallen on some of these mortgages, lenders still require big deposits to access them, which means first-time buyers who couldn’t qualify for a mortgage three months ago are still no better off.
“If the market is to start a proper long-term rehabilitation, it will need a sustained improvement in first-time buyer lending. This looks some way off.”