Average loan-to-value ratio eases to 70%

The average loan-to-value (LTV) ratio on house purchase loans increased to 70% in December 2009, leaving the typical homebuyer requiring a 30% deposit.

According to research from the Mortgage Advice Bureau, the tendency for lenders to require large deposits in exchange for reasonable rates is softening, having improved from an average LTV of 67% in November and 69% across the final quarter of 2009.

Furthermore, research from the online broker shows that variable-rate mortgages were more popular than fixed-rate deals in December, accounting for 60% of all home loans compared with 53% in November.

The firm also calculates that the typical loan for a house purchase stood at £130,971 in December, up from £119,415 a month earlier.

Meanwhile, the value of the average December remortgage advance slipped slightly last month, to £154,863, compared with £155,334 in November.

In related news, the Bank of England recently reported a rise in the availability of mortgages with LTVs above 75%, alongside an overall improvement in mortgage lending in the three months to early December.

In its Credit Conditions Survey, the Bank attributed the upturn to improvements in the economic outlook and better prospects for house prices.

The report also revealed that banks and building societies are expecting “a further slight increase” in mortgage lending in the first quarter of 2010.

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