The UK mortgage market enjoyed a solid start to the year as residential lending and new mortgage commitments both rose.
The outstanding value of all residential mortgage loans rose to £1.45bn in the first quarter, a 3.4 per cent rise on a year earlier.
The value of new mortgage commitments also rose 4.5 per cent to £63.8bn, the Bank of England’s latest mortgage lenders data revealed.
Mortgage loans with a loan to value (LTV) ratio of more than 90 per cent increased to 4.5 per cent, compared with 3.3 per cent the previous year, despite the Prudential Regulation Authority airing concerns over “risky lending.”
Private Finance mortgage consultant Chris Sykes said high LTV lending should not be written off as “risky practice.”
He said: “For many first-time buyers high LTV loans are their only route onto the property ladder, and with today’s stringent affordability checks in place, this should be seen as a viable choice.”
However, the total loan balances in arrears continued to fall, reaching 0.99 per cent – the lowest since the Bank’s research began in 2007.
Managing director of mortgage provider Responsible Lending, Keith Haggart, said “opportunistic” first-time buyers were taking advantage of high LTV mortgages.
He said: “There is a developing trend which means buyers are borrowing over longer periods, and this can drive up the LTV, helping them to keep more cash in their pocket.
“This means that what first appears to be a case of first-time buyers shrugging off the Brexit gloom and borrowing more, is actually really just a case of putting down smaller deposits. “This may be because they want more flexibility in their household finances,” he added.