Mortgage approvals increased in April, latest data shows

There was a sharp increase in mortgage approvals in April as home owners continued to take advantage of low mortgage rates across much of the market, the latest data shows.

There were 65,781 mortgages approved during April 2019, up 2.7% compared to the same month in 2018, according to the mortgage monitor from residential chartered surveyors e.surv.

The report points out that while new activity in the wider housing market remains stagnant in many areas of the country, existing home owners 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, with new approvals up 5.5% compared to March and the proportion of loans given to those with small deposits, usually first time buyers, reached 28.5%, up from the 26% recorded in March.

‘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,’ said Richard Sexton, director at e.surv.

‘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,’ he added.

However, the data also shows that the proportion of mortgage approvals to large deposit borrowers fell in April, continuing the recent trend away from this part of the market. Indeed, less than a quarter of all loans, just 24.3%, were to these borrowers in April, lower than the 26.2% recorded in March 2019 and some way off the 2019 high of 28.1%, recorded in January.

There was a modest fall in mid-market activity, down from 47.8% to 47.2% month on month while on an absolute basis, the number of small deposit borrowers rose substantially, increasing from 17,205 to 18,748.

‘Large deposit borrowers once held a 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,’ Sexton pointed out.

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 at 36.6%. This is the fifth successive month that the region has been top.

Next was the North West where 35.1% of loans went to this part of the market and then the Midlands at 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 at 28.1% this month. Behind that were Northern Ireland and the South and South Wales regions, both on 25.5%.