- Existing homeowners grabbing bargain mortgage rates
- Slower house price growth helps some younger people onto ladder
Remortgages remain the main area of activity in the mortgage market as the wider housing market stalls.
The latest Mortgage Monitor from e.surv, the UK’s largest residential chartered surveyors, found that there were 65,770 residential mortgages approved during July 2019 (seasonally adjusted).
This figure is 0.8% higher than the same point in 2018, but represents a fall of 1% compared to June 2019’s total.
The strongest activity was in the remortgage market, as demonstrated by the proportion of loans going to large-deposit borrowers (those with a loan to value (LTV) of lower than 60%).
Low rates have ensured that activity in the remortgage market has remained buoyant, despite slowdowns in the wider market.
Some small-deposit buyers have also benefited from the historically low rates, as well as the wide range of mortgage products available.
In July, a solid 27.9% of all mortgage completions were carried out by small-deposit borrowers (those with an LTV of 85% and above). This is the same as the previous month, but higher than the 27.7% recorded in May.
Richard Sexton, Director at e.surv, comments:
“Current mortgage rates remain at a historically low level and this certainly appears to be tempting some new borrowers into the market.
“For those lucky enough to already own a home, these rates have encouraged many existing homeowners to remortgage at a low rate and give themselves security over their payments in the coming years.
“These rates, coupled with a general slowdown in house price growth, are helping more young buyers, who are often strapped for cash, onto the ladder.
“Despite this, the market for purchase mortgages remains largely flat.”
Monthly number of total sterling approvals for house purchases (seasonally adjusted)
Remortgage activity surges
There was a substantial increase in the market share of borrowers with large deposits this month.
Enticed into the market by low rates, this group of borrowers grew their market share from 24.7% in June to 26.6% in July, e.surv found.
This figure is also significantly higher than previous months. In May the proportion of large-deposit borrowers was 24.5% and in April just 24.3%.
These shifts meant that the proportion of successful mid-market loans (borrowers with an LTV of 60-85%) was 45.6% this month.
On an absolute basis, the number of small-deposit borrowers was 18,350 in July. This compares to the 18,365 recorded in June.
Richard Sexton, Director at e.surv, comments:
“Despite a scorching hot July across much of the country, remortgage activity remained strong during the month.
“The number of small-deposit buyers securing a mortgage in July remained similar to the high levels recorded in June, as some house hunters shunned the beach and headed to the estate agent.”
Proportion of large deposit loans by region
Yorkshire reclaims crown as small-deposit hotspot
Yorkshire reclaimed its crown as the best location for buyers with a small deposit.
The region claimed this title for the first five months of 2019 but was toppled by Northern Ireland in June.
However, Yorkshire was able to leapfrog its rival in July, with 35.4% of all mortgages in the region going to those with small deposits.
This was ahead of Northern Ireland’s figure of 34.5%.
Elsewhere, the North West (33.0%) and the Midlands (32.1%) were the only other areas to see more than 30% of their loans go to this market segment.
At the other end of the scale, London once again recorded the smallest proportion of these borrowers, at 17.7%.
The capital also had the highest proportion of large-deposit buyers, with 33.6% of all mortgage approvals going to this part of the market.
This put it ahead of its closest rival, the South East, which recorded 30.9%.
Proportion of small deposit loans by region
Richard Sexton, Director at e.surv, concludes:
“First-time buyers tend to have a much easier time getting onto the ladder in the north of England and Northern Ireland.
“Lower purchase prices often help these borrowers onto the ladder earlier in life, meaning we see greater activity in northern areas at a younger age.
“However, it is not all doom and gloom for those based in other regions.
ockets of value exist in all parts of the country, meaning those with smaller deposits can often find a way to get onto the ladder.”
Data source: e.surv Chartered Surveyors
Data from: July 2019