The latest data and analysis from residential chartered surveyors, e.surv, has revealed that homeowners continued to take advantage of low mortgage rates during April with approvals up 2.7% year-on-year.
According to the figures, there were 65,781 mortgages approved during April 2019 reflecting the competitive nature of today’s mortgage market.
While new activity in the wider housing market remains stagnant in many areas of the country, existing homeowners are capitalising on a battle between high street banks and other lenders which has seen interest rates fall so far this year.
This was also reflected in the rise in activity compared to March. The number of new approvals was up 5.5% on the previous month. First-time buyers have also benefited from these competitive rates, even if the market for those moving home remains subdued.
The proportion of all loans given to customers with a small deposit, including most first-time buyers, was 28.5% this month.
This is significantly higher than the 26% recorded in March and shows how lenders are turning their attention to first timers, given the slowdown in other parts of the market, most notably buy-to-let.
Richard Sexton, Director at e.surv, comments: “In many parts of London and the South East, the property market continues to move slowly. Yet this has not translated into the mortgage market with activity remaining strong.
There has been a healthy increase in the proportion of loans going to first-time buyers, showing that lenders are welcoming these customers with open arms. Previously it may have been difficult for these borrowers to get their foot on the ladder, but lenders are now reaching out to these parts of the market.”
Boost for borrowers with smaller deposits
The proportion of mortgage approvals to large deposit borrowers fell in April, continuing the recent trend away from this part of the market.
Less than a quarter of all loans (24.3%) were to these borrowers this month. This is lower than the 26.2% recorded in March 2019 and some way off the 2019 high of 28.1%, recorded in January. Given the large rise in small deposit borrowers - from 26% to 28.5% - this meant there was a modest fall in mid-market activity, down from 47.8% to 47.2% month-on-month.
On an absolute basis, the number of small deposit borrowers rose substantially, increasing from 17,205 to 18,748.
Richard Sexton, Director at e.surv, comments: “Large deposit borrowers once held an tight grip on the mortgage market but that has loosened in recent times. Yet the low rates available mean that there are still many current homeowners coming to the market for new loans.”
Yorkshire remains on top for first- time buyers
First-time buyers, and others looking to purchase in Yorkshire benefited from the most favourable market conditions for small deposit borrowers. More than a third of the region's mortgage approvals were to those with little equity or cash to spare - 36.6%.
This is the fifth successive month that the region has held this crown, covering the whole of the current calendar year.
Its closest rivals were the North West - where 35.1% of loans went to this part of the market - and the Midlands, where the figure was 31.8%. By contrast, those looking to buy in London had a much tougher time, accounting for just 18.9% of approvals recorded in April.
The capital was the area of the country most dominated by large deposit borrowers, with 33% of all loans going to this market segment. This was ahead of the South East region, which scored 28.1% this month. Behind that were Northern Ireland and the South and South Wales regions, both on 25.5%.
In Eastern England this ratio was 25.2%, with all other regions having fewer than a quarter of loans taken out by large deposit customers.
Richard Sexton, Director at e.surv, concludes: “In recent years we have seen Yorkshire, the North West and Northern Ireland battle it out to be the most favourable place for first-time buyers to get onto the ladder. Yet we have seen a shift this year with Yorkshire taking the lead in every month so far in 2019.
That’s not to say the other areas have become difficult places to buy, both the North West and Northern Ireland offer good value to would-be homeowners.”