Mortgage market on road to recovery

The mortgage market is on the road to recovery after four months of sustained growth – but there are still less mortgages available than at the start of the year, according to moneysupermarket.com

Its figures suggest the market is slowly recovering after dramatically plunging in the first half of the year, with the total number of mortgage products growing 13% since the August trough.

However, when compared to January, the number of mortgages is down 27%. At the start of the year, there were a total of 3,384 mortgage products available which subsequently fell to a low of 2,182 in August, but has since steadily risen to 2,430.

The most significant growth has been in 85% loan to value (LTV) products, which have grown by a third since January.

Hannah-Mercedes Skenfield, mortgage manager at moneysupermarket.com, says caution on behalf of lenders has driven developments in the mortgage market.

"The real barrier to increased mortgage lending over the last couple of years has been on the supply side, as lenders have been extremely reluctant to open their purse strings a little for fear of increasing their book of bad debt," she says. "This meant that the market was dominated by rather tepid products with low LTVs."

She adds the growth in the number of 85% LTV products is therefore encouraging.

"The growth in higher LTV deals suggests this equity obsession is dying out a little," continues Skenfield. "However, those with very little equity or deposit will remain concerned by the complete collapse of the 95% LTV market, which has fallen by 75%."