Approvals show "no signs of falling further": e.surv
As a proportion of the whole market, more buyers with small deposits are getting onto the housing ladder than at the same point a year ago.
The number of approvals was largely flat between September and October – dropping by 0.7% month-on-month – according to the latest e.surv data.
A total of 62,522 house purchase mortgages were approved in October. However, this figure is still 11.1% below the 72,409 recorded at the same point last year.
October 2016’s figure also remains well below this year’s peak of 72,512, recorded in February, which was boosted by buyers making house purchases before April’s stamp duty tax changes.
The e.surv research says that although approvals dropped sharply following June’s EU referendum, they have held strong in subsequent months and show "no signs of falling further".
Despite the number of approvals falling, the proportion of loans made to borrowers with a deposit of less than 15% remains above the level seen a year ago. The survey found 16.7% of all loans were made to this part of the market in October, slightly higher than the 16.5% reported 12 months ago.
Overall, 10,441 approvals were made to small deposit borrowers during the month of October. This was marginally down on September’s total of 10,741 approvals but considerably lower than the 11,947 recorded last October, reflecting the smaller size of the overall mortgage market this month.
Northern Ireland has overtaken the North West of England to become the best location for smaller deposit borrowers to purchase a home. In October 29.5% of all loans in Northern Ireland went to these borrowers, ahead of the 25.9% found in the North West.
Elsewhere, the market in London and the South East continues to be dominated by those with large deposits. Some 41.4% of borrowers in the South East and 41.2% in London had deposits of more than 60%, well ahead of every other UK region.
Scotland (38.3% of all loans) was another market dominated by large deposit buyers, up from the 37.9% recorded a month ago.
The North West (24.9%) was the market with the smallest proportion of these borrowers, followed by Yorkshire (25.5%) and Northern Ireland (29%).
Richard Sexton, director of e.surv chartered surveyors, commented: “It seems safe to say that fears of a post-Brexit collapse in the mortgage market were unfounded. While activity is down compared to earlier in the year, approvals show no signs of falling further. There is however a higher proportion of re-mortgage lending than earlier in the year.
“Super low mortgage rates continue to lure new buyers into the market. The good news for first-time buyers is that they are not being disproportionately hit by the drop in approvals. In fact, as a proportion of the whole market, more buyers with small deposits are getting onto the housing ladder than at the same point a year ago.
“Northern Ireland and the North West continue to tussle for the top spot for low deposit borrowers. In reality, both areas are great places for young people and first-time buyers to purchase a home. Low house prices and a good variety of housing stock make them an ideal place to buy.”