Mortgage market has slowly recovered this year

Research by moneysupermarket.com has shown that the mortgage market posted a modest grown this year after experiencing a slump in the early quarters of 2009. The study revealed that the supply of mortgages has increased.

However, moneysupermarket.com said that the total number of mortgage products available are still 27 percent down since the start of the year.

Hannah-Mercedes Skenfield, mortgage manager at moneysupermarket.com, said, “It certainly seems that we could be on the long road to recovery, after four months of sustained growth in the number of mortgage products available. The real barrier to increased mortgage lending over the last couple of years has been on the supply side, as lenders have been extremely reluctant to open their purse strings a little for fear of increasing their book of bad debt. This meant that the market was dominated by rather tepid products with low LTVs.”

Data showed that there were a total of 3,384 mortgage products available at the start of 2009. The figure fell to 2,182 in August, although the number has since steadily risen to 2,430. There has been strong growth in 85% Loan to Value (LTV) products which have risen by a third since January.

Skenfield said that the growth in the number of products available at 85 percent LTV is particularly very encouraging. For many consumers the real difficulty in getting on the property ladder is in scraping together a deposit.

“Because of the financial crisis lenders became obsessed with equity to the point where affordability became a secondary consideration. The result of this was that mortgages at a higher LTV were nearly impossible to obtain, which in turn contributed to the property market stalemate. The growth in higher LTV deals suggests this equity obsession is dying out a little. However, those with very little equity or deposit will remain concerned by the complete collapse of the 95 percent LTV market, which has fallen by 75 percent,” she said.