Its mortgage monitor found the fall in loans was steepest among high LTV borrowers, typically first-time buyers.
The average LTV on a house purchase loan in September fell to 59%, and just 1 in 10 of all house purchase loans went to borrowers with an LTV of 85% or over, continuing a three month trend. The number of loans to borrowers with a deposit of less than 15% fell below 5,000 for the last three months. The last time that happened was between May and July last year, said e.surv.
Richard Sexton, business development director of e.surv, said: “September isn’t just a one off. The mortgage market has been struggling since early June, and is considerably weaker than it was this time last year. The period between August 2011 and May this year marked a real upturn in lending. But that fillip planted false hope.
“Since then, the effects of the double dip recession have sapped the confidence lenders have in the economy. That, combined with a squeeze on the funding lenders get from the money markets has dragged down lending. Criteria on high LTV mortgages have become more restrictive, and this has choked off first-time buyer lending.”
September marked the fourth consecutive month of a year-on-year fall in house purchase lending, suggesting the market is significantly weaker than it was this time last year. The research showed lending in Q3 was 7% lower than the equivalent period last year, with 11,019 fewer house purchase loans. To illustrate the extent of the decline, house purchase lending in September is 10% lower than September 2009.
In separate research, the LSL Property Services Acadametrics data showed transactions fell 24% in September, which it cited as a knock-on effect of Olympic distraction. Its index showed house prices drift down 0.1% on a monthly basis, while annual house price increase slowed to 2.2%.
David Brown, commercial director of LSL Property Services, said: “It’s clear that the September housing market was still feeling the effects of the distraction of the Olympics in August, with lower activity and reduced competition in the previous month feeding through into a lower number of sales in September. In fact, transactions fell by 24%, compared to a typical seasonal monthly fall of 9%.
“While we have already started to see buyer activity rebound, the short-term factors hampering September’s performance shouldn’t mask the wider problems the national housing market faces. The lack of lending, especially to first-timer buyers, is choking off first-time buyer sales outside of prime London, while uncertainty over job prospects in many parts of the country is still affecting sentiment of many prospective buyers.”
