9 Jun

Mortgage lenders' restrictions 'to blame' for market woes

Mortgage lenders' restrictions 'to blame' for market woes

Mortgage lenders rather than interest rates are to blame for the troubles in the housing market because of the increasing restrictions they are placing on home loan deals, Moneyextra.com has claimed.

According to its latest monthly review of the mortgage market, the average loan-to-value (LTV) ratio being considered by first-time buyers last month was just unfer 82 per cent.

However, it notes that many lenders are now restricting borrowers to loans of no more than 75 per cent, while some will only offer their most competitive rates to those need an LTV of 60 per cent or less.

The website stated that the average property value being searched for on its website by first-time buyers in May was £170,236 - an LTV of 75 per cent on that sum would require the borrower to find a hefty deposit of £42,559.

Robin Amlot, senior editor of Moneyextra.com, commented: "It's all but impossible for many potential buyers to find a lender because of the size of deposit they're being asked to provide."

Recently the price comparison website found that the price first-time buyers are prepared to pay for a property has fallen significantly in recent months, from a peak of £190,040 in December 2007.
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