Small deposit lending increases for fourth consecutive month

Small deposit buyers continued to increase their share of the UK mortgage market in April, representing 21.5% of all lending, according to e.surv data.

Related topics:  Mortgages
Rozi Jones
25th May 2017
New house FTB
"April was a positive month for the UK mortgage industry with the overall size of the market growing on a monthly basis for the first time since November 2016."

On an absolute basis, there were 14,413 loans granted to small deposit buyers in April - substantially higher than the 13,845 recorded in March.

This the fourth successive month small deposit buyers have grown, and the trend stretches right back to the end of last year. In December 2016 their market share was 16.1%, this rose to 18.7% in January and again to 20.5% in February.

When broken down on a regional basis, Northern Ireland saw more small deposit borrowers than anywhere else during April 2017, making up 34.6% of the market.

Only two other regions saw more than a quarter of loans go to small deposit borrowers. They were the North West - where 31.6% of all loans went to this segment of the market - and Yorkshire, which recorded 28.9%.

April was also the third month in a row that the proportion of loans given to home buyers with large deposits was below the 35% mark.

Northern Ireland, the North West and Yorkshire were the only three regions where there were more small deposit buyers than large deposit ones. In Northern Ireland 28.9% of loans went to large deposit buyers while in Yorkshire it was 25.4% and in the North West 24.3%.

Scotland saw the smallest proportion of loans go to first-time buyers and others with small deposits. In total 18.4% of loans went to this part of the market in April, a smaller proportion than anywhere else in the UK. This was well below even London, where 20.2% of all loans went to smaller buyers.

Richard Sexton, director of e.surv chartered surveyors, commented: “April was a positive month for the UK mortgage industry with the overall size of the market growing on a monthly basis for the first time since November 2016.

“There was even better news for first-time buyers and others with small deposits. Their share of the market has risen yet again in April. That is not to say there aren’t significant challenges ahead, but data from the market this month is overwhelmingly positive.

“Remember, first-time buyers are the lifeblood of the property market. Low rates and better availability have helped people buy their first home. Their presence then allows others to move up the ladder and keep the whole market moving.

“Northern Ireland is the best place in the UK to get on the ladder if you only have a small deposit saved. However, other regions such as the North West and Yorkshire have provided equally fertile ground for new borrowers so far in 2017.”

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