Low Mortgage Rates Supported Housing Activity in November
Rose Jinks - December 18, 2018
The number of mortgages approved in November was flat compared to the previous month, but competitive remortgage and first time buyer markets mean that activity was actually up on the same month of last year.
The latest Mortgage Monitor from chartered surveyors e.surv found that 67,109 mortgages were approved during the month of November (on a seasonally-adjusted basis).
This is marginally higher than in October, when 67,011 approvals were recorded.
On an annual basis, November saw a healthy rise in activity, with approvals up by 4%.
Low mortgage rates continue to represent good value for those with an appetite to commit to remortgaging, e.surv found. But, in addition to these remortgages, first time buyers have continued to increase their market share.
In November, 25.9% of all loans went to borrowers with a small deposit. This is higher than the 24.6% recorded a month ago, as well as the 24.2% market share in September.
This has helped sustain activity towards the end of the year. Typically, the number of homebuyers searching for new properties tails off as the country heads into winter.
Richard Sexton, the Director at e.surv, comments: “Conventional wisdom suggests that, as we reach the end of the year, the number of people looking for houses drops away.
“But, while this is likely to be the case next month, the latest approval figures suggest that cheap mortgages are attracting a consistent level of borrowers into the market, regardless of the weather.”
He continues: “However, in December, mortgage lenders often look to secure their annual targets, sometimes resulting in keenly-priced deals on offer at the end of the year.
“We have already seen a number of cheap first time buyer deals launch in recent weeks, and other lenders could follow suit.”
Increase in small deposit borrowing
The number of mortgages approved for small deposit buyers rose once again in November, as the market share of mid-market and large deposit borrowers was squeezed.
Large deposit borrowers accounted for 28.9% of the market in November, which is lower than the 29.6% recorded in October.
Despite this fall, the proportion of loans to mid-market borrowers dropped back on a monthly basis. This was due to the rise in loans to small deposit customers.
Some 45.2% of all loans went to mid-market borrowers in November, which is lower than the 45.8% recorded in the previous month.
On an absolute basis, the amount of small deposit borrowers grew rapidly, from 16,485 to 17,381.
Sexton says: “The market has continued to shift towards those first time buyers and others with smaller deposits, and away from those with large amounts of equity in their property.
“Almost 1,000 additional small deposit buyers achieved their dream of homeownership this month compared to October.”
Yorkshire: the small deposit hotspot
Northern regionsc ontinued to be the most attractive for small deposit homebuyers in November.
In Yorkshire, 34.8% of all loans were awarded to borrowers with smaller deposits, which is higher than any other region. This put the region ahead of the North West (31.0%) and Northern Ireland (29.2%).
These three regions all recorded a higher proportion of small deposit borrowers than their large deposit counterparts in November.
The fourth area where this was the case was the Midlands, where small deposits made up 28.5% of the region’s market.
At the other end of the scale, just 16.5% of borrowers in London were in this category. This put the capital ahead of the South East, where the figure was 20.9%.
London and the South East saw their respective markets dominated by those with cash to splash. Large deposit borrowers accounted for 38.2% of the market in the capital, while, in the South East, this figure was 35.0%.
Yorkshire (20.7%), the North West (22.8%) and the Midlands (24.9%) all saw less than a quarter of mortgage approvals go to this segment of the market.
In Northern Ireland, 27.8% of mortgages were to those with larger deposits.
Sexton explains: “While experts often talk about UK-wide averages, scratch underneath the surface and there are several distinct regional markets in the UK.
“People looking to buy in northern parts of England, as well as Northern Ireland, tend to have smaller deposits, while those closer to London must have a big amount of cash to put down.”
He concludes: “Buyers in the south of England should not be despondent, however, as there are great pockets of value in the capital and surrounding counties.”
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