The number of mortgage approvals for home buyers has reached its highest level since the troubled mini-budget announced by Liz Truss.
Lloyds, the UK’s largest mortgage lender, is now offering first-time buyers the option to borrow up to 5.5 times their salary. This initiative, called the First-time Buyer Boost, has allocated £2 billion for those seeking loans greater than 4.5 times their income, representing an increase of over 20% in the borrowing limit.
For instance, with a household income of £50,000 and a 10% deposit, the maximum loan could rise from £224,500 to £275,000. However, to qualify for this increase, buyers will need to save at least £28,700, as the 10% deposit is the minimum requirement.
To qualify for Lloyds’ “boost,” borrowers must apply for a first-time buyer mortgage through Lloyds, have a household income of £50,000 or more, and a loan-to-value (LTV) ratio of up to 90%. Shared ownership or shared equity schemes are not eligible for this offer.
Lloyds is not the first lender to introduce this kind of option. Nationwide has been offering a similar loan since 2022, and Skipton Building Society provides a 5.5 times income-to-loan ratio on its no deposit mortgage.
Recent data has revealed a notable rise in annual house price growth, marking the fastest increase in over two years. According to Nationwide Building Society, property values across the UK have surged by 2.4% over the past year.
This uptick in house prices equates to an average increase of £6,222 per home compared to the previous year. Consequently, the average sale price of a property now stands at £265,375. This trend reflects a significant shift in the housing market, indicating a robust recovery and growing demand in the property sector.
The number of mortgages approved for home purchases has surged to its highest level since the mini-budget introduced by former Prime Minister Liz Truss. According to the Bank of England, there were 62,000 mortgage approvals in July, marking the highest monthly total since September 2022, when 65,100 approvals were recorded. This increase highlights a rebound in the housing market following a period of uncertainty.
The surge in approvals comes after a significant rise in mortgage rates triggered by the mini-budget statement delivered by then-Chancellor Kwasi Kwarteng in September 2022. This statement, part of a broader “growth plan,” led to a sharp increase in borrowing costs, which had a considerable impact on the housing market.
In recent weeks, there has been a gradual decline in mortgage rates, providing some relief to potential homebuyers. Additionally, earlier this month, the Bank of England made a notable adjustment by cutting the base rate by 0.25 percentage points to 5%. This reduction in the base rate aims to ease borrowing costs and stimulate the housing market, contributing to the recent rise in mortgage approvals.
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