Small deposit buyers continue to grow market share

The proportion of small deposit borrowers across the UK continued to grow, increasing for the third successive month to take a 21.4% market share, according to e.surv data.

Related topics:  Mortgages
Rozi Jones
1st May 2017
New house FTB
"Likely buoyed by the number of government schemes and low mortgage rates across the board, small deposit buyers are growing in strength in today’s mortgage market."

This segment of the market was 16.1% in December, rising to 18.7% in January and then 20.5% in February.

However, the overall size of the market has shrunk both compared with last month and the same stage in 2016.

There were 64,695 loans (seasonally adjusted) approved in March 2017 versus 66,911 in February, a 5.3% fall. This figure is also 7.7% lower than the same point a year ago.

The proportion of loans made to home buyers with large deposits remained below 35% for a second successive month, but these borrowers still outstrip their small deposit counterparts by a considerable margin. Defined as those buyers with a deposit of 60% or more – these larger deposit borrowers made up 34.4% of the market in March.

The North West and Yorkshire are the only regions where more loans were approved for small deposit buyers than larger ones.

In the North West the proportion of small deposit buyers was 31.7%, versus 23.1% for those with larger sized pots of cash. It was a similar story in Yorkshire where 30.9% of the market was for small deposits compared to 23.8% for larger ones.

The Midlands (27.3%) and Northern Ireland (26.1%) were the two other areas where first-timers and other small deposit buyers made up more than a quarter of the market in March.

It was the opposite situation in London, where transactions continued to be dominated by buyers with large cash piles. In the capital city just 13.6% of buyers had a small deposit – the smallest percentage figure recorded – although this is better than last month when it was just 12.8%.

Richard Sexton, director of e.surv chartered surveyors, commented: “This is a trend which started at the end of last year and has continued into 2017. Likely buoyed by the number of government schemes and low mortgage rates across the board, small deposit buyers are growing in strength in today’s mortgage market.

“A more first-time buyer oriented market is good news for all as new buyers help start chains and allow others to move up the housing ladder – vital for a properly functioning property market.

“With more loans going to small deposit borrowers than anywhere else, the North West and Yorkshire have proven once more that they are ideal places for people to get onto the ladder. It’s a different picture in southern regions, with London a particularly tough place for first-time buyers.”

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