The latest data and analysis from residential chartered surveyors, e.surv, has revealed that high activity in April was followed by an equally strong performance during May for the mortgage market.
According to the data, the mortgage market showed no signs of being affected by the slowdown facing the property market and saw 65,801 residential mortgages approved during the month representing a 1.2% rise compared to the same month a year earlier.
This growth comes at a time when activity in the property market has tailed off in many areas, with many local markets showing little signs of growth.
It is existing homeowners who have driven the mortgage market forward so far in 2019. This is because mortgage lenders have continued to offer competitive deals, despite many having to contend with higher funding costs.
May’s lending total did drop back slightly from last month’s figure, falling by 0.7% month-on-month. The proportion of loans given to first-time buyers and others with small deposits also declined when compared to April’s stellar figure, dropping by 0.7%.
However, this figure is still well ahead of the 26% recorded in March and demonstrates the strong performance of the first-time buyer market, even when others are holding off on making purchases.
Richard Sexton, Director at e.surv, comments: “The doom and gloom in the property market seems a mile away from the positive stories coming out of the mortgage market.
While few people are moving when they don’t have to, first-time buyers are still desperate to get onto the ladder. As for existing homeowners, they are being tempted into the market by near record low interest rates. Those looking to switch could save hundreds of pounds a month by moving to a cheaper deal from a rival lender.”
Mid-market borrowers continue to dominate
The proportion of mortgage approvals to borrowers with a small deposit dropped back slightly in May. Large deposit borrowers felt the benefit somewhat, but it was the mid-market which saw the greatest increase in activity. Over the course of the month, 27.7% of all loans went to smaller deposit borrowers, down compared to last month.
Meanwhile the number of loans to their larger deposit counterparts grew modestly from 24.3% to 24.5%. This meant it was mid-market borrowers who increased their share of the market most substantially, growing from 47.2% to 47.8% month- on-month.
This returns activity to the exact level recorded in March. On an absolute basis, the number of small deposit borrowers dropped from 18,748 to 18,227.
Richard Sexton, comments: “The strength of the remortgage market means that many mid-market borrowers, who often benefit most from switching, are flocking to lenders in search of a cheaper deal, supported by advice from mortgage professionals.”
Yorkshire holds on to small deposit hotspot title
The North West failed to leapfrog Yorkshire, with the latter taking the crown as small deposit hotspot once more in May.
The region offered the most favourable market conditions for small deposit borrowers this month. This means it has held its place at the top of the chart throughout 2019 so far. In Yorkshire 34.9% of all loans went to this part of the market, higher than all rival regions.
In the North West, the nearest challenger, this figure was 33.7%. The only other region to record over 30% was the Midlands, which registered a total of 31.3% this month.
At the other end of the scale, London was once again the most difficult market for these borrowers, with just 17.5% of loans in the capital made to these customers. London was once again dominated by those with large amounts of equity, with 32.8% of all loans going to those with cash to splash.
This is ahead of South East, which recorded 27.9%, and Eastern England, which was 25.9%. By contrast, the proportion of large deposit borrowers in Yorkshire was 19.1% and in the North West 19.3%.
Richard concludes: “Few people are likely to move to the other end of the country purely in search of a cheap house, but those in, or close to Yorkshire stand a much better chance of getting onto the property ladder with a small deposit. The North West and the Midlands have also proven strong places to get onto the ladder for the first time, with 30% of all loans going to this part of the market.
Once again it is those looking to make a purchase in London and the South East that will need to have the most
cash as a deposit.”