Remortgage activity fuels mortgage market growth in November

• Small spike in mortgage approvals in November
• Low rates have lured many homeowners back to market
• Large deposit borrowers grow their market share

Low mortgage rates have tempted more existing homeowners to re-enter the market and remortgage in November.

The latest Mortgage Monitor from e.surv, the UK’s largest residential chartered surveyors, found that there were 65,879 residential mortgages approved during November 2019 (seasonally adjusted).

This represents a 2% increase in activity when compared to October’s figure and, a rise of 2.8% compared to November 2018.

One factor contributing to the rise may be that some mortgage lenders have cut mortgage rates in recent months to help meet their end-of-year lending targets.

While rates have been at a historically low level for some time, the lack of activity in the wider housing market has meant there have been fewer people seeking mortgages this year.

Banks and building societies have responded by cutting rates even further, in a bid to tempt existing homeowners to remortgage.

This strategy appears to have worked, as evidenced by the sharp increase in remortgage approvals this month. Correspondingly, the market also shifted slightly towards those with larger deposits in November.

Some 27.7% of all loans were to borrowers with small deposits this month, down from 29.2% in October.

In the same period large deposit lending nudged up from 28.8% to 28.9% of the mortgage market.

Richard Sexton, Director at e.surv, comments:

“It used to take a lot to tempt existing homeowners back into the mortgage market, but this is often no longer the case.

“Homeowners are increasingly clued-up and savvy when it comes to remortgaging and finding the best deals on rates.

“This rush to secure better rates may be behind the bump in approvals we have seen in November.”

Monthly number of total sterling approvals for house purchases (seasonally adjusted)

Small decrease in market share of small deposit borrowers

November saw a shift in the make-up of the mortgage market, as first-time buyers and others with small deposits decreased their share, while lending to those with larger deposits rose.

This month 28.9% of all loans were to borrowers with large deposits. This is higher than the 28.8% total recorded during October.

Mid-market borrowers saw their share of the mortgage market grow from 42.9% to 43.4% in the same time frame.

These changes mean that the proportion of mortgage approvals to small deposit customers dropped to 27.7% this month.

On an absolute basis, the number of small deposit borrowers was 18,248. This figure is lower than the 19,271 total recorded in October.

Richard Sexton, Director at e.surv, comments:

“There was a modest decline in the number of small deposit buyers this month – the category into which first-time buyers most commonly fall. 

“However, the overall mortgage market grew in November, largely thanks to strong re-mortgage activity. 

“Borrowers with large and medium sized deposits increased their market share over the month.”

Proportion of large deposit loans by region

London tops large deposit hotspots

Despite recent slowdowns in house price growth, the London market was once again dominated by large deposit borrowers. 

More than a third of loans (36.2%) in the capital went to borrowers with LTV (loan-to-value) ratios of 60% or lower. This compares to just 19.6% which went to small deposit borrowers.

The South East (34.6%), the South and South Wales (31.7%) and Eastern England (31%) were the other areas which saw a significant proportion of loans going to the large deposit market.

By contrast, borrowers in northern England and Northern Ireland enjoyed the most fertile market conditions for those with small deposits.

In Yorkshire, 35% of all loans went to small deposit borrowers, the category into which many first-time buyers commonly fall. This was a higher proportion than any other region.

Close behind was the North West, where the proportion of small deposit borrowing was 33.7%. This was followed by the Midlands (30.6%) and Northern Ireland (28.3%).

Yorkshire had the smallest percentage of large deposit lending, with just 21.5% of all loans in the region going to these customers.

Proportion of small deposit loans by region

Richard Sexton, Director at e.surv, concludes:

“As we approach the end of 2019, we can reflect on what many have called a difficult year for the UK property market. 

 “While the market has certainly seemed sluggish some parts of the country, it’s important to recognise that the UK is of course made up of many smaller markets which can have wildly different conditions for borrowers and lenders to contend with.”

Data source: e.surv Chartered Surveyors

Data from: November 2019