Mortgage market starts to grow in June but lending to small desposit borrowers shrinks again
– More mortgage approvals in June 2017 than previous month and June 2016
– Yorkshire sees highest proportion of small deposit borrowers
– Proportion of borrowers with large deposits has grown since May
The mortgage market started to grow once again during June, according to the latest Mortgage Monitor from e.surv, one of the UK’s largest residential chartered surveyors.
There were 65,887 loans (seasonally adjusted) approved this month, compared with the 64,645 recorded during May. That total is also 1.4% higher than at the same point during 2016.
However, some areas of the market have performed more strongly than others and the proportion of loans granted to buyers with a small deposit actually fell month-on-month.
In June 2017 18.5% of all loans went to this segment of the market. This is below the 21.3% recorded last month and further back from the 2017 high of 21.5%, recorded in April.
But this is still well above the most recent low, recorded in December 2016, when those with small deposits represented just 16.1% of the market.
Richard Sexton, director of e.surv, comments: “It is great news that the mortgage market is growing once again. Approvals are up both compared to last month and June 2016.
“With the whole market moving this means that homeowners are able to move up the ladder, or to downsize if they need to. This also creates room at the bottom for first-time buyers to jump onto the ladder in future months.”
Mid-market borrowers see market share grow
Large deposit buyers – defined as those with a deposit of 60% or more – accounted for 34.5% of the total home loan market this month. This is higher than in May 2017, when these borrowers made up 33.9% of the overall pool.
However, this is the fifth successive month that those with large deposits have accounted for less than 35% of the total market.
Small deposit buyers saw their share of the mortgage market shrink compared to last month. Despite the overall growth of the market month-on-month there were fewer loans granted to these borrowers in June than there were in May.
On an absolute basis, there were 12,189 loans granted to small deposit buyers in this survey period – lower than the 13,769 approved a month ago.
These changes meant the ‘mid-market’ borrowers saw their share of approvals edge closer to the 50% mark. Some 47% of all mortgages went to this part of the market in June, up from the 44.8% the month before.
Richard Sexton, director of e.surv chartered surveyors, comments: “While the number of small deposit buyers being approved for mortgages has fallen, this should not be seen as a negative.
“As those properties up the ladder change hands this will free up those homes at the bottom of the market for first-time buyers in future months. This allows the cycle of growth to continue ”
|Region||Proportion of large deposit lending (June 2017)||Proportion of large deposit lending (May 2017)||Proportion of large deposit lending (April 2017)|
Yorkshire is top spot for small deposit buyers
First-time buyers and those with small deposits are proportionately more likely to have a mortgage application approved in Yorkshire than anywhere else in the UK.
Some 28.1% of all loans in the region were made to small deposit buyers during June 2017.
This put Yorkshire ahead of nearest challengers the North West (26.3%) and Northern Ireland (25.7%). These were the only three areas to have more than a quarter of loans given to small deposit borrowers.
At the other end of the scale, London was the region which saw the smallest proportion of small deposit loans approved. This month only 14.3% of loans were to this part of the market, compared to 17.9% last month.
London was the region most dominated by those with more cash or equity to put down. In June 40.5% of all mortgage loans were given to those with large deposits, higher than anywhere else in the UK.
The South East (39.2%) and the South and South Wales (37.7%) were the other regions with the highest proportion of these loans.
Only two regions saw more loans go to small deposit buyers than their large deposit counterparts. They were Yorkshire, where 28.1% of loans went to small borrowers versus 24.2% for bigger ones, and in the North West, where the ratio was 26.3% versus 25.3%.
|Region||Proportion of small deposit lending (June 2017)||Proportion of small-deposit loans (May 2017)||Proportion of small-deposit loans (April 2017)|
|South/ South Wales||17.4%||20.0%||20.8%|
Richard Sexton, director of e.surv chartered surveyors, concludes: “Most people don’t choose which region to live in based on the chances of their mortgage being approved. But if they did, Yorkshire would surely come top of the pile for most first-time buyers.
“Lower property prices and greater mortgage approval chances make the region a great place to get onto the ladder if you have a small deposit.
“Conversely, Londoners continue to struggle with less than 15% of all loans going to these buyers this month. Those with a small deposit face an uphill struggle in the capital.”
Data source: e.surv Chartered Surveyors
Data from: June 2017