The proportion of approvals made to borrowers with a small deposit was 18.3%, which is down on the previous high of 19.1% recorded in April of this year. However, it still remains above the level recorded in previous years. In July 2015 16.2% of mortgage approvals were to small deposit borrowers and in July 2014 this figure was 17.4%.
Borrowers with small deposits (worth 15% or less of their properties’ total value) continue to occupy a smaller proportion of the market than earlier in the year. In April, 19.1% of approvals were made to this part of the market, but by July that figure had fallen to 18.3%.
However in absolute terms, 12,021 loans to small deposit borrowers were approved in July, a figure well above the 10,588 recorded at the same point last year. In July 2015 small deposit loans represented 16.2% of the total market.
Large deposit borrowers – defined as those with a deposit of 60% or more – continued to greatly outnumber their small deposit counterparts. Some 33.2% of all loans in July were made to these customers, higher than the 30.7% recorded a year ago.
The North West was home to the highest proportion of small deposit loans, with 27% of all approvals made to these buyers. This is higher than the 25% recorded a year ago and well above the national average. Yorkshire (26.8%) and Northern Ireland (23.7%) also saw a high proportion of loans made to first-time and other small deposit buyers.
London continued to be the most difficult place to buy with a small deposit, with just 7.4% of loans in the capital going to this segment of the market. This percentage was virtually flat year-on-year.
Richard Sexton, Director of e.surv, had this to say: “Whilst summer transactions levels have softened slightly, this can largely be attributed to the markedly high transaction rate earlier this year and the expected summer lull. The immediate aftermath of the vote on June 23rd saw lenders and borrowers act with caution, but subsequent policy decisions have been made to restore confidence to the market. The impact of these measures will be seen in future months, but should provide assurance for both borrowers and lenders alike.
First-time buyers and those with small deposits will hope that the Bank of England’s base rate cut and funding programmes increase the amount of products on the market due to increased competition between lenders.
First-time buyers remain the lifeblood of the housing market, but the difficulty of saving for a deposit and lenders’ preference for high LTV lending continue to be problematic for these borrowers. Changes to the stamp duty regime gave some respite to new buyers by reducing demand for properties. Annual house price increases have also slowed, which should help new buyers."
