Remortgages are the main area of activity in the mortgage market currently as the wider housing market stalls, the latest mortgage monitor report shows.
There were 65,770 residential mortgages approved during July 2019, up 0.8% year on year, but down 1% month on month, according to the date from chartered surveyors e.surv.
It says that low rates have ensured that activity in the remortgage market has remained buoyant, despite slowdowns in the wider market. Some small deposit buyers have also benefited from the historically low rates, as well as the wide range of mortgage products available.
In July, 27.9% of all mortgage completions were carried out by small deposit borrowers, unchanged month on month but higher than the 27.7% recorded in May.
‘Current mortgage rates remain at a historically low level and this certainly appears to be tempting some new borrowers into the market. For those who already own a home, these rates have encouraged many existing home owners to remortgage at a low rate and give themselves security over their payments in the coming years,’ said Richard Sexton, director at e.surv.
‘These rates, coupled with a general slowdown in house price growth, are helping more young buyers, who are often strapped for cash, onto the ladder. Despite this, the market for purchase mortgages remains largely flat,’ he pointed out.
There was a substantial increase in the market share of borrowers with large deposits, up from 24.7% in June to 26.6% in July and significantly higher than previous months. In May the proportion of large deposit borrowers was 24.5% and in April 24.3%.
Yorkshire was the best location for buyers with a small deposit at 35.4% of all mortgages in the region going to those with small deposits, followed by Northern Ireland at 34.5%, the North West at 33% and the Midlands 32.1%, the only other areas to see more than 30% of their loans go to this market segment.
At the other end of the scale, London recorded the smallest proportion of these borrowers, at 17.7%. The capital also had the highest proportion of large deposit buyers, with 33.6% of all mortgage approvals going to this part of the market. This put it ahead of its closest rival, the South East, which recorded 30.9%.
‘First time buyers tend to have a much easier time getting onto the ladder in the north of England and Northern Ireland. Lower purchase prices often help these borrowers onto the ladder earlier in life, meaning we see greater activity in northern areas at a younger age,’ Sexton explained.
‘However, it is not all doom and gloom for those based in other regions. Pockets of value exist in all parts of the country, meaning those with smaller deposits can often find a way to get onto the ladder,’ he added.
