Market bounces back as July sees strong growth in mortgage approvals, up by nearly 7% year-on-year
– Mortgage approvals rise 6.7% year-on-year
– More borrowers with small deposits getting onto the ladder than last month
– Northern Ireland is hot spot for borrowers
A total of 66,083 loans (seasonally adjusted) were approved this month, higher than the 65,887 recorded in June. Approval levels are also significantly higher than at the same point last year. The number of loans approved this month is 6.7% higher than the total recorded in July 2016.
The proportion of loans granted to buyers with a small deposit also increased between June and July. This month 19.6% of all mortgage loans went to this part of the market, up on the 18.5% recorded in the previous month.
Despite the improved performance, the ratio of small deposit buyers remains below the 2017 peak of 21.5% – recorded in April. The most recent low was recorded in December 2016, when those with small deposits represented just 16.1% of the market.
e.surv Director, Richard Sexton, comments: “The mortgage market is in a much happier place than 12 months ago when, in the aftermath of the UK’s vote to leave the European Union, activity has stalled as buyers and sellers took a pause of breath.
One year on and we have seen approval levels bounce back, with 6.7% more loans agreed this July than there were n the month following the Brexit vote.”
Large deposit lending remains stable
While the proportion of small deposit borrowers grew, those with larger deposits – defines as those with a deposit of 60% or more – saw their market share remain relatively flat month-on-month.
In July 2017, these buyers accounted for 34.2% of the overall mortgage market, marginally down in the 34.5% recorded last month. This is the sixth successive month where borrowers with large deposits have accounted for less than 35% of the total market.
The number of smaller deposit buyers rose as both a percentage and on an absolute basis between June and July. There were 12,952 loans to this segment of the market – which contains many first-time buyers – approved this month.
This compares with the 12,189 figure reported by this survey a month ago.
As a result of these changes, mid-market borrowers saw their market share drop from 47% to 46.2% month-on-month.
Says Richard Sexton: “The proportion of large deposit buyers remained broadly stable in July, ticking down slightly month-on-month. Looking at the longer trends developing, we can see that approvals to the this part of the market have stayed below the 35% mark since February.
This is likely to be because highly competitive mortgage deals and government scheme s are helping smaller and mid-market borrow either get onto or move up the housing ladder. ”
Northern Ireland is home to most small deposit buyers
When broken down on a regional basis, Northern Ireland was the area of the UK with the greatest proportion of small deposit buyers.
Some 31.7% of all approvals were given to first-time buyers and others with small deposits here, higher than any other region surveyed.
Yorkshire was close behind as 30.6% of all loans went to this segment of the market during July. These were two of the three regions to see a greater proportion of loans go to small deposit buyers than their large deposit counterparts.
The North West was the other area to do so, with 28.9% of loans approved for small deposit buyers versus 23.8% for those with more cash or equity to put down.
London continues to be the area of the UK most dominated by buyers with large savings. In the capital, just 8.3% of all loans went to small deposit borrowers in July, down from a ratio of 14.3% in the last survey. In July 42.9% of loans went to large deposit buyers.
The South East was close behind as 40.9% of all loan approvals in the region were made to those with big deposits.
The South and South Wales (38.3%), Scotland (37.3%) and Eastern England (37%) regions were the others to have the highest proportion of these loans.
Richard Sexton, again: “The difficulties Londoners face when trying to get on the property ladders are shown here once again. Buyers with a small deposit in the capital face a much more difficult task when they try to on, or move up, the property ladder. The market in London is more dominated by those with cash to splash than any other area of the UK.
By contrast, Northern Ireland is the best spot for first-time buyers and others with little cash to put down. Almost a third (31.7%) of all loans in this area went to small deposit buyers this month.”
Data source: e.surv Chartered Surveyors
Data from: July 2017