Mortgage approvals up 7.8% year-on-year

Mortgage market ends summer on a positive note

Number of approvals is much higher than a year ago 

Yorkshire is top location for small deposit borrowers

Mortgage approvals during August were significantly higher than a year ago, according to the latest Mortgage Monitor from e.surv, the UK’s largest residential chartered surveyor.

This month there were 66,145 loans (seasonally adjusted) approved to borrowers across the country. This is 7.8% higher than the total recorded during August 2016.

While the overall mortgage market has been growing, the proportion of loans granted to buyers with a small deposit has also been increasing. This month some 20.3% of all loans went to this market segment, higher than the 19.6% recorded during July 2017’s survey.

While the number of small deposit buyers is growing in both absolute and percentage terms, the figure for August remains below the 2017 peak of 21.5% – recorded in April. However, it is well above the most recent low – recorded in December 2016 – when those with small deposits represented just 16.1% of the market.

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

“As the summer draws to a close, the UK mortgage market is in a much healthier position than a year ago. Approval rates are 7.8% higher than a year ago, and first-time buyers are taking more of the overall market.

“A year ago the market was dealing with the doom and gloom of the Brexit vote, but the past 12 months have seen a strong recovery for the mortgage industry and the outlook for the future is very positive.”

Mid-market borrowers feel the squeeze

Large deposit borrowers – defined as those with a deposit of 60% or more – saw their share of the overall market grow during August.

These borrowers accounted for 34.4% of the overall mortgage market this month, fractionally up on the 34.2% recorded in July.

However, this now the seventh successive month where borrowers with large deposits have occupied less than 35% of the overall mortgage market.

With the proportion of both small and large deposit borrowers increasing this month, it meant those mid-market customers were squeezed. While still outnumbering those other two market segments, the proportion of mid-market borrowers was 45.3% during August. This compares to 46.2% in July.

The number of smaller deposit buyers – a category which includes many first-time buyers – rose as both a percentage and on an absolute basis in this survey. There were 13,427 approvals to these borrowers this month compared to 12,952 during July. survey a month ago.

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

“Mid-market borrowers found themselves squeezed this month as the number of approvals to bigger and smaller deposit borrowers increased.

“Those with large pots of cash or equity always find it easiest to get finance as mortgage lenders are most eager to take their business. At the other end of the scale, government schemes and lender offers are helping more first-time buyers get onto the ladder.”

Yorkshire is small deposit hotspot

Small deposit borrowers occupied a greater proportion of the market in Yorkshire than in any other region of the UK during August.

Almost a third (32%) of all loans in the region went to first-time buyers and others with smaller deposits this month.

The North West and Northern Ireland both saw at least 30% of all loans go to small deposit buyers. In the North West 30.8% of all loans went to this part of the market while in Northern Ireland the ratio was exactly 30%.

These three areas were the only regions surveyed to see more loans go to small deposit buyers than their large deposit counterparts.

For comparison, large deposit buyers represented 29.6% of the market in Northern Ireland, 23.5% in the North West and 23.3% in Yorkshire.

At the other end of the scale, London continues to be the region with the smallest proportion of small borrowers. Just 12.6% of all buyers in the capital had a small deposit, although this is higher than the 8.3% recorded in July.

By contrast, 39.1% of all mortgage approvals in the capital went to those with large deposits this month. However, one region saw a higher proportion of these loans than London. In the South East 40.6% of all loans were to borrowers with a large amount of equity.

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

“While Yorkshire, the North West and Northern Ireland jostle for the top position, each region is a great place for first-time buyers to get onto the property ladder.

“Each of the three areas enjoy good quality housing stock in areas people want to live, plus prices are more in line with local wages – unlike many areas in southern England.

“This problem is most acute in London, where a large deposit is a vital for anyone trying to get onto the housing ladder for the first time.”

Data source: e.surv Chartered Surveyors

Data from: August 2017