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Mortgage applications surge as deposits fall to 12-month low

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  • 28/04/2015
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Mortgage applications surge as deposits fall to 12-month low
Consistently falling mortgage rates and rising average loan-to-values (LTV) are helping lower income borrowers onto the property ladder as mortgage applications increased 18% in the month to March.

According to statistics published by the National Mortgage Index and Mortgage Advice Bureau (MAB), the average salary of a purchase mortgage applicant fell to £38,159 in March, its lowest point in over two years.

The typical deposit placed by borrowers also dropped, hitting a 12-month low in March to £68,877, also down 3.2% compared to the previous month when the average deposit stood at £71,169.

The findings come despite a 0.4% increase in average UK house prices recorded by the Halifax house price index in March.

Higher LTVs available on mortgage products provided further help for low income borrowers with small deposits, according to MAB, with the average LTV rising from 69.4% in February to 70.3% in March.

MAB also attributed plummeting mortgage rates to the rise in mortgage affordability, with the average two and five-year fixed rates reaching record lows of 3.06% and 3.60%, respectively.

Brian Murphy, head of mortgage lending at Mortgage Advice Bureau (pictured), said: “A rise in average LTVs is always welcome for borrowers. Not so long ago, 90% mortgages were seen as a normal part of a healthy, functioning market. It doesn’t mean that consumers are borrowing beyond their means because safeguards are in place to prevent this and all applicants are thoroughly stress-tested before their mortgage is approved.”

Murphy said that the rise in both purchase and remortgage applicants in March had helped to reverse the slowdown in mortgage activity.

“However, prospects for long-term growth could be derailed if affordability declines thanks to a shortage of properties coming on to the market. This is why addressing insufficient housebuilding must be a political priority – regardless of who is elected in May,” he concluded.

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