First-time buyers take advantage in October - e.surv Chartered Surveyors

Market Insight, Mortgage Monitor //

2018 ends on a high note for mortgage approvals

Growth in number of approvals to small deposit borrowers. Four regions are dominated by these buyers. Overall market up compared to last month.

2018 ends on a high note for mortgage approvals

    • Rise in December as more buyers achieve home ownership dream
    • Activity up 7.8% year-on-year and 4.2% versus November
    • More than a quarter of loans go to those with small deposits

A turbulent year for the mortgage market ended on a positive note following an impressive number of mortgage approvals in the month of December.

The latest Mortgage Monitor from e.surv, the UK’s largest residential chartered surveyors, found that there were 66,390 mortgages approved during the final month of the year (seasonally adjusted).

December is often a quiet month for mortgage approvals given fewer people are purchasing properties at this time of year.

However, this year number of approvals was 4.2% higher than November’s figure.

Even more impressively, December’s 2018 total was 7.8% up compared to the same month in 2017.

There are several reasons for the boost in activity. In a year where homeowners had to contend with a further rise in the Bank of England’s base rate, competition between banks and building societies has helped keep rates at a historically low level.

The base rate rise in August was the catalyst for many existing homeowners to remortgage to a cheaper deal, of which many have been available.
By the end of the year, lenders were actually cutting rates in order to meet ambitious end-of-year lending targets.

Lenders also became more receptive to first-time buyers and others with smaller deposits, with a rise in the number of 5% deposit mortgage deals on the market.

By December, 25.2% of all loans went to borrowers with a small deposit. This was marginally down on November’s 25.9% figure, but higher than other recent months.

Richard Sexton, a Director of e.surv Chartered Surveyors, comments:

“2018 saw the second base rate rise in less than a year, continued uncertainty over Brexit and wider global economic issues.

“Yet the mortgage market demonstrated its resilience with strong activity in most segments of the market.

“First-time buyers, remortgage customers and second steppers all jumped at the chance to bag a cheap mortgage rate while they last.

“The outlook for 2019 is again one of uncertainty, but the figures from the final few months of 2018 suggest that the mortgage market has the power to battle through tough market conditions.”

Monthly number of total sterling approvals for house purchases (seasonally adjusted):

Number of small borrowers ticks down in December

After a stellar performance in recent months, the proportion of loans going to small deposit borrowers fell back slightly in December.

Small deposit borrowers accounted for 25.2% of the overall mortgage market this month, marginally down on the 25.9% recorded a month ago.

The proportion of large deposit borrowers grew strongly month-on-month, rising from 28.9% in November to 30.1% in December.
This meant the proportion of mid-market borrowers ticked down from 45.2% to 44.7% month-on-month.

On an absolute basis, the number of small deposit borrowers dropped from 17,381 to 16,730.

Richard Sexton, a Director of e.surv Chartered Surveyors, comments:

“Following the outstanding November figures for small deposit borrowers, some drop off was to be expected in December.

“Even so, almost 17,000 first-time buyers and other small deposit borrowers were able to get onto the housing ladder this month.”

Proportion of large deposit loans by region:

Yorkshire ends year as best place for small deposit buyers

In a year where the northern regions of England and Northern Ireland competed for the title, Yorkshire ended 2018 as the best location for first-time buyers and others with small deposits.

In Yorkshire, 32.3% of all loans went to this section of the market, ahead of its two major rivals.

In Northern Ireland, 31.5% of mortgage approvals were to small deposit borrowers and in the North West, this figure was 31.4%.

This set of borrowers had a much tougher time in London and the surrounding regions.

In the capital, just 15.1% of loans went to small deposit customers while in the South East this figure was 21.6%.

Large deposit borrowers enjoyed a much greater share of the London market, recording 39.2%.

The South East was close behind at 36.2%.

The North West, Northern Ireland and Yorkshire were the only regions to see a greater proportion of mortgages go to small deposit borrowers than their large deposit counterparts.

Proportion of small deposit loans by region:

Richard Sexton, a Director at e.surv Chartered Surveyors, concludes:

“The year ended much as it began when it comes to the regions of the UK. Those borrowers in the north of England and Northern Ireland tended to have small deposits when buying a home.

“By contrast, those in London and the home counties usually require a significantly larger deposit in order to buy their desired property.

“The new year will see a new batch of first-time buyers trying to get onto the ladder, and those existing homeowners look to move to their next home.”

 

Data source: e.surv Chartered Surveyors

Data from: December 2018