Large deposit borrowers fall to lowest level in 2017
– Proportion of large deposit take smaller share of market
– Size of overall mortgage market shrinks compared to last year
– North West England sees highest proportion of small deposit lending
The proportion of people buying a home with a large deposit fell in May, according to the latest Mortgage Monitor from e.surv, one of the UK’s largest residential chartered surveyors.
Large deposit buyers – defined as those with a deposit of 60% or more – took out 33.9% of all home loans this month. This is down on the 34.6% recorded in April and is the lowest ratio seen so far in 2017, well below the 35.4% recorded in January.
Borrowers with small deposits saw their share of the market sip slightly from 21.5% to 21.3% month-on-month, with mid-market borrowers benefiting from other shrinking parts of the market.
The overall size of the mortgage market grew month-on-month but remained smaller than it was in May 2016. There were 64,645 loans (seasonally adjusted) approved this month, 1.1% higher than in April 2017 but 3.2% down on the same month a year ago,
Richard Sexton, director of e.surv chartered surveyors, comments: “May was a month for the mid-market borrowers as large and small deposit buyers saw their share of the market fall.
“But this can also be viewed as a positive for young buyers. As mid-market borrowers move up the ladder and into bigger properties, this frees up stock for buyers looking to get onto the ladder for the first time.”
Small deposit buyers see market share drop back
After four successive months of growth, small deposit buyers saw their overall share of the UK mortgage market fall back in May.
These buyers took 21.3% of the market this month, down on the 21.5% recorded during April but still high compared to the recent past.
As recently as December 2016, small deposit buyers represented just 16.1% of the market.
This meant that despite the growth in the overall mortgage market month-on-month there were fewer loans given to small deposit buyers. On an absolute basis, there were 13,769 loans granted to small deposit buyers this month – lower than the 14,413 recorded in April.
At the other end of the scale, May was the fourth month in a row to see large deposit loans take up less than 35% of the total market. Both these factors combined meant that mid-market borrowers took 44.8% of all mortgages today versus 43.9% a month ago.
Richard Sexton, director of e.surv chartered surveyors, comments: “While the number of small deposit borrowers has fallen between April and May, the market still remains much bigger than it was at the turn of the year.
“Low mortgage rates and government schemes are helping more buyers onto the ladder and we are seeing this happen in greater numbers than it was at the end of 2016.
“We are also detecting an apparent shift in the geographical distribution of lending overall – with London and the South East growing quieter, and areas North of Birmingham showing growth in applications.”
| Region | Proportion of large deposit lending (May 2017) | Proportion of large deposit lending (April 2017) | Proportion of large deposit lending (March 2017) |
| Northern Ireland | 38.0% | 28.9% | 36.1% |
| Yorkshire | 25.7% | 25.4% | 23.8% |
| North West | 24.1% | 24.3% | 23.1% |
| Midlands | 27.9% | 28.7% | 29.4% |
| Scotland | 39.4% | 37.9% | 38.8% |
| Eastern England | 34.3% | 35.7% | 35.1% |
| South/South Wales | 34.6% | 37.2% | 38.0% |
| South East | 37.5% | 37.3% | 37.8% |
| London | 38.0% | 38.0% | 41.9% |
North West tops chart for small deposit borrowers
The North West of England was home to more small deposit borrowers than any othe part of the UK during May 2017.
In this region buyers with small deposits made up 31.1% of the total market, some distance ahead of the other areas surveyed.
Yorkshire (29.5%), Northern Ireland (26.3%) and the Midlands (25.5%) were the only other areas surveyed to see more than a quarter of loans go to first-time buyers and others with small deposits.
London saw the smallest proportion of loans taken by small deposit borrowers, with just 17.9% of those in the capital in this category. This was just ahead of Scotland where 19% of mortgage customers had a small deposit.
A month ago those positions were reversed as 18.4% of Scottish loans went to this segment of the market compared to 20.2% in London.
Only two regions surveyed saw more loans go to small deposit customers than bigger deposit ones. They were the North West, where 31.1% of borrowers had small deposits versus 24.1% for other borrowers, and Yorkshire, which saw a 29.5% against 25.7% split.
The region most dominated by buyers with large amounts of cash was Scotland. Here 39.4% of all loans were made to this type of customer – higher than anywhere else surveyed.
London, Northern Ireland (both 38%) and the South East (37.5%) had the next biggest reliance on buyers with large deposits.
| Region | Proportion of small-deposit loans (May 2017) | Proportion of small-deposit loans (April 2017) | Proportion of small-deposit loans (March 2017) |
| Northern Ireland | 26.3% | 28.9% | 26.1% |
| Yorkshire | 29.5% | 25.4% | 30.9% |
| North West | 31.1% | 24.3% | 31.7% |
| Midlands | 25.5% | 28.7% | 27.3% |
| Scotland | 19.0% | 37.9% | 18.3% |
| Eastern England | 21.9% | 35.7% | 21.3% |
| South/ South Wales | 20.0% | 37.2% | 19.5% |
| South East | 20.5% | 37.3% | 19.4% |
| London | 17.9% | 38.0% | 13.6% |
Richard Sexton, a director of e.surv chartered surveyors, concludes: “Borrowers are likely to find the mortgage market quite different depending on where in the country they live.
While most would expect these borrowers to struggle in London, would-be buyers in Scotland face an equally difficult time as most purchases are made with large deposits.
Areas of northern England and Northern Ireland remain a much better bet for those saving for their first home as the local markets are more favourable to the circumstances of young borrowers.”
Data source: e.surv Chartered Surveyors
Data from: May 2017