More mortgages being approved for first time buyers in the UK
Mortgage approvals in the UK during August were significantly higher than a year ago, with loans to smaller deposit first time buyers also up, the latest report reveals.
Home loans approved across the country were 7.8% higher than the total recorded in August 2016, according to the latest Mortgage Monitor report from residential chartered surveyors e.surv.
While the overall mortgage market has been growing, the proportion of loans granted to buyers with a small deposit, usually these are first time buyers, has also been increasing with some 20.3% of all loans in this market segment, higher than the 19.6% recorded during July 2017.
The report shows that the number of small deposit buyers is growing in both absolute and percentage terms but the figure for August remains below the 2017 peak of 21.5% recorded in April.
However, Richard Sexton, director of e.surv, pointed out that it is well above the most recent low recorded in December 2016 when those with small deposits represented just 16.1% of the market.
‘The UK mortgage market is in a much healthier position than a year ago. Approval rates are 7.8% higher year on year and first time buyers are taking more of the overall market. A year ago the market was dealing with reverberations of the Brexit vote, but the past 12 months have seen a strong recovery for the mortgage industry and the outlook for the future looks more settled,’ he said.
The report also shows that large deposit borrowers, defined as those with a deposit of 60% or more, saw their share of the overall market grow during August. These borrowers accounted for 34.4% of the overall mortgage market this month, fractionally up on the 34.2% recorded in July.
However, this is now the seventh successive month where borrowers with large deposits have occupied less than 35% of the overall mortgage market. With the proportion of both small and large deposit borrowers increasing this month, it meant those midmarket customers were squeezed, the report points out.
While still outnumbering the other two market segments, the proportion of mid-market borrowers was 45.3% during August, down from 46.2% in July.
‘Mid-market borrowers found themselves squeezed this month as the number of approvals to bigger and smaller deposit borrowers increased. Those with large pots of cash or equity always find it easiest to get a mortgage application approved, as lenders are most eager to take their business. At the other end of the scale, Government schemes and lender offers are helping more first time buyers get onto the ladder,’ Sexton added.