Average LTV hits 70%: MAB

In December, LTVs were 3% higher than in November, providing evidence that banks are starting to relax their lending criteria and are lending at higher levels again.The average LTV on purchase mortgages arranged in Q4 2009 was 68%, the same figure as the previous quarter.

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

Only 40% of mortgages arranged in December 2009 were on fixed-rate deals compared to 80% in April 2009.

The average mortgage loan in December was £130,971 up 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.

Brian Murphy, head of lending at Mortgage Advice Bureau, said that 2010 will be the year of rebuilding and repairing some of the damage which occurred in the last 18 months

He added: "While a full-blown recovery is overly optimistic, there have certainly been signs over the past quarter that lenders are easing slightly on their hard stance with regards to new business lending. With average loan-to-value on new mortgage transactions rising to 70% in December, this does suggest that the stringent lending environment that blighted the mortgage market in 2009 is likely to be less hostile in 2010."

Murphy also anticipates that lenders will continue to support the house purchase market with a continuing supply of competitively priced mortgage products, enabling buyers and movers to take advantage of buying opportunities.