Strong mortgage performance continues into June - e.surv Chartered Surveyors

Market Insight, Mortgage Monitor //

Strong mortgage performance continues into June

Approval levels improve on stellar May. Greater proportion of loans go to small deposit borrowers. First-time buyers enjoy greatest success in Yorkshire.
  • Approval levels improve on stellar May
  • Greater proportion of loans go to small deposit borrowers
  • First-time buyers enjoy greatest success in Yorkshire

The stable performance of the UK mortgage market during May continued into June, with buyers across the country achieving their dream of home ownership in increasing numbers.

The latest Mortgage Monitor from e.surv,  the UK’s largest residential chartered surveyors, found that there were 66,435 mortgages approved in the month (seasonally adjusted).

This is 3% higher than in May, and builds on the growth seen a month ago.

First-time buyers continued to be among the main beneficiaries, with these and other buyers with small deposits taking a greater share of the overall mortgage market than a month ago.

The Mortgage Monitor found that 23.4% of the total UK mortgage market went to this type of borrower during June.

This is higher than the 22.4% recorded in May and continues a recent trajectory which has seen small deposit borrowers increase their share of the market.

Regional disparities continued this month, with would-be buyers in different areas of the country having to contend with wildly different housing markets.

Yorkshire was the top location for small deposit borrowers, with 33.7% of all loans going to these customers. In London this figure was just 16.2%.

The Bank of England chose to keep the base rate at 0.5% in June, although speculation is increasing about a potential rise in August.

The central bank will consider a range of factors before the next meeting of its Monetary Policy Committee, including the potential impact on mortgage borrowers a rise in interest rates would have on mortgage borrowers.

Richard Sexton, Director at e.surv, comments:

“While the housing market appears to have plateaued in some areas, there was good news for those looking to borrow to fund a house purchase.

“Mortgage approval rates are up both compared to last month and the same point a year ago, suggesting that lenders are offering deals which are tempting more borrowers to the market.

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

Large deposit borrowers up compared to May

The proportion of large deposit borrowers – defined by this survey as having a deposit of 60% or more – increased between May and June.

These borrowers occupied 32.9% of the market this month, modestly higher than last month, when the figure was 32.8%.

Given small deposit borrowers also saw their market share increase, it was the mid-market borrowers who saw their share of the market squeezed during June.

These customers saw their overall share of the market fall from 44.8% a month ago to 43.7% today. This figure is even lower than the 46.6% found in April.

Thanks to a rise in small deposit borrowers’ share and the increased overall market, there was a sharp increase in the absolute number of these borrowers getting finance this month.

The Mortgage Monitor revealed that 15,546 loans were approved to small borrowers during June, well above the 14,891 record a month earlier.

Richard Sexton, Director at e.surv, comments:

Benign market conditions mean this has already been an excellent summer for small deposit borrowers, and this good form has continued into June.”

Proportion of large deposit loans by region

Regional differences hold strong during June

The UK mortgage market continued to be varied, depending on where in the country a borrower is looking to buy.

The London market remains the most difficult for first-time buyers to get a foothold into. Just 16.2% of loans in the capital went to borrowers with small deposits, lower than anywhere else in the country.

By contrast, those in Yorkshire enjoyed a much higher share of their local market.

In this region some 33.7% of all mortgages went to those with small deposits – the highest recorded by the Mortgage Monitor.

The North West enjoyed a similar rate of small deposit buyers, recording 32.1% this month. Northern Ireland was close behind with a rate of 28.1%.

However, Northern Ireland displaced London as the part of the UK with the highest proportion of buyers with large deposits.

In this region 39.8% of all approvals were to borrowers of this kind, ahead of London where the figure was 38.5%.

The South East, with 38%, was another area to be dominated by large deposit customers.

Close behind was the South and South Wales regions, where this figure was 36.7%, and then Eastern England at 35.6%.

The North West was the region with the lowest proportion of buyers with small deposits, recording 22.3% in the month of June.

Proportion of small deposit loans by region

Richard Sexton, Director at e.surv, concludes:

 “It really is a postcode lottery as to the local market you experience. Areas of London and the South East continue to be dominated by cash buyers and those with large deposits.

“Yet the opposite is true in areas of northern England, where there are better opportunities for those with small deposits to get onto the property ladder.

“But with lenders offering low rates across the whole country, now is a good time to lock into a cheap mortgage deal before rates eventually begin to rise once more.”

Close Bitnami banner
Bitnami