The latest data and analysis released today by e.surv has shown that buyers with smaller deposits were particularly active during a mostly positive January.
Residential chartered surveyor, e.surv, announced that there were 66,350 mortgages approved in January 2019. The number of mortgages approved in January is often lower than in a typical month, as December is traditionally a slow month for house hunting.
However, there was strong growth compared to the previous month, with approvals rising 4% between December and January. When compared to January 2018, approvals were actually down 1.8%.
Despite mixed predictions for the housing market this year, there were encouraging signs for younger borrowers with little cash to spare.
In January, some 27.1% of all mortgage approvals were to borrowers with a small deposit. This represents a strong improvement on December’s market position, when the number of approvals to these borrowers was 25.2%.
Richard Sexton, Director at e.surv, had this to say: “There are many predictions for the housing and mortgage markets in 2019, ranging from the bullish to the more cautious. But the data for January shows that the market has started the year in reasonable health, with approvals rising compared to December 2018.
Hard-pressed first-time buyers will be pleased to see a swing towards borrowers with small deposits this month. If this pattern continues across the year, it will be a welcome relief to those struggling to get a foot onto the housing ladder.”
The figures also revealed that here was a swing in the market from large deposit borrowers to those with smaller deposits during January. The proportion of loans approved for borrowers with a large deposit or amount of equity fell from 30.1% last month to 28.1%.
This shift helped small deposit borrowers take a much larger share of the market at the start of 2019. Small deposit borrowers represented 27.1% of the overall mortgage market in January, higher than the 25.2% recorded a month ago.
These changes in the market meant very little change for the mid-market borrowers. The market share of these borrowers was almost flat, moving from 44.7% to 44.8%.
On an absolute basis, the number of small deposit borrowers grew from 16,730 in December 2018 to 17,981 in January 2019.
Richard Sexton, Director at e.surv, comments: “First-time buyers are becoming the new battleground for mortgage lenders. Rates are being cut and, perhaps more importantly, lenders are receptive to applicants that previously may have found accessing finance challenging. Almost 18,000 small deposit buyers achieved their mortgage dream this month, a stellar result.
Data from the first month of 2019 suggests that the trends we saw develop throughout 2018 could remain in place again this year.
Those looking to buy in London need a large deposit to ensure they can get a mortgage deal while the markets in northern areas and Northern Ireland are much more tilted towards first-time buyers and those with less cash to spare. As 2019 enters full swing it will be interesting to see whether these areas continue to be dominated by small deposit borrowers.”