Lender relaxes mortgage criteria

The housing market has received some good news after the UK's second biggest mortgage lender announced it is making its best deals more easily available to people with smaller deposits.

People who want to borrow up to 70% of their home's value will now be able to take advantage of Abbey's fixed-rate mortgages. Previously, the deals were only available to those with at least a 40% deposit.

The group has so far also resisted raising the rates charged on any of the deals to reflect the lower deposits borrowers must put down. This comes after it reported a 15% rise in mortgage lending during the first three months of this year.

Abbey mortgage director Nici Audhlam-Gardiner said: "Increasing the LTVs (loan to values) on all our fixed-rate mortgages that were previously available at 60% LTV to 70% LTV will help those looking to purchase a property, move home or remortgage.

"Our approach to mortgage lending remains prudent but this is a sensible move given some of the early signs of confidence returning to the housing market."

Abbey is now offering the second best rate available for a 70% LTV, with a five-year fixed-rate deal of 4.69%. The group has also made available a two-year fixed-rate loan at 3.65% and a three-year one at 4.14%.

The announcement comes as the Council of Mortgage Lenders published figures showing a 29% jump in the number of mortgages taken out by people buying a home during March in a further sign of a pick-up in housing market activity.

Earlier this week the Royal Institution of Chartered Surveyors said that enquiries from potential buyers rose at their fastest pace in almost a decade during April.

Commentators welcomed Abbey's move as a step in the right direction, although they said it would not have a huge impact on the mortgage market.

It comes as other lenders have also begun to loosen their lending criteria slightly, with HSBC launching a best buy five-year fixed-rate deal at 4.39% for people borrowing up to 75% of their home's value.