Esurv says Funding for Lending is not yet boosting mortgages

Ben Southwood
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MORTGAGE lending dived in September, data from Esurv showed today, implying the Funding for Lending Scheme (FLS) has failed to boost loans so far.

Home loans slumped seven per cent in September, the surveyor said, to just 47,603, the third worst September since records began 19 years ago.

As well as slipping in number, loans contracted in size. The average loan to value (LTV) ratio – the size of the loan compared to the value of the house it was secured on – dropped to 59 per cent, the lowest for 18 months.

This suggests that FLS has so far failed to loosen lending conditions in the housing market, but Richard Sexton at Esurv said he expected its impact to be felt in coming months.

“Analysts have been quick to criticise FLS after an inauspicious start in August, but it will prove to be a slow-burn,” Sexton predicted, “[This means] FLS will begin to translate into higher mortgage lending in the fourth quarter, which will help more first time buyers get a foot on the ladder.”

But in September, first time buyers, who generally require high LTV mortgages, had a hard time. Just a tenth of home purchase loans had an LTV of 85 per cent or above in September, Esurv’s data revealed.