Mortgage loan to value reaches 70%, reports London Mortgage Advice, North London Mortgage Broker Monday, 25th January 2010

According to the latest figures from the Mortgage Advice Bureau, the average LTV on residential purchase mortgages arranged in December 2009 nudged 70%, the first time it has reached this level since April 2009.

Providing evidence that banks are starting to relax their lending criteria and tentatively lending at higher levels again,
the average LTV in December 2009 was 3% higher than the corresponding figure for November 2009 - 67%,The average LTV on new residential purchase mortgages arranged in Q4 2009 was 68%, the same figure as the previous quarter.

The percentage of variable rate mortgage transactions was 60%in December 2009 compared to 53% of transactions in November 2009 following the latest Mortgage Advice Bureau figures also reveal that more borrowers chose variable rate products over fixed rate mortgages, for the second consecutive month.

With borrowers backing interest rates to stay low for the foreseeable future and happy to take a shorter term view,
variable rate mortgages are now the overwhelming choice amongst new borrowers, with the number of new fixed rate mortgage transactions 50% lower in December 2009, compared to six months earlier.

As they back interest rates to stay low for the foreseeable future,only 40% of mortgages arranged in December 2009 were on fixed rates compared to 80% in April 2009, clear evidence that variable rate mortgages are now the overwhelming choice amongst new borrowers, as they back interest rates to stay low for the foreseeable future.The average mortgage loan in December was £130,971up from £119,415 in November, a 9.7% increase, while the average remortgage loan in December was £154,863 compared to £155,334 in November.

“Although we have seen a number of more positive reports concerning the health of the economy, the economic outlook is still far from clear and this uncertainty could stall any short term recovery. However, we still anticipate that lenders will continue to support the house purchase market with a continuing supply of competitively priced mortgage products, enabling those buyers and movers to take advantage of some very attractive buying opportunities.” Brian Murphy, head of lending, Mortgage Advice Bureau, says.