Base rate rise leads to more approvals

Michael Lloyd

December 20, 2017

After the Bank of England base rate rose the number of approvals increased between October and November.

The latest Mortgage Monitor from surveyors e.surv recorded 66,167 mortgage approvals last month, as a number of homeowners switched to fixed rate deals.

The approvals figure was up 2.5% on October’s total, but 1% down compared to the same month a year ago.

Richard Sexton, director of e.surv, said: “After months of speculation, the Bank of England base rate increased to 0.5%, and this has prompted many people to switch their mortgage and lock in a low rate.

“Overall approvals have increased month-on-month, and we expect this to continue as those on variable rate mortgages see their monthly payments increase. Many will be able to switch elsewhere and save.”

Despite approvals increasing month-on-month the number of borrowers with small deposits being approved declined.

Across the UK 17.2% of all loans went to these borrowers, continuing a recent downward trend.

Although the proportion of small deposit buyers fell there was no rise in the market share of those with large deposits.

Some 36.5% of all approvals went to those with large deposits, which was defined by this survey as those with a deposit of 60% or more.

This is the same proportion as the month before, meaning there was a boost to mid-market borrowers, with this group occupying 46.3% of the market this month compared to 45.8% in October.

Sexton added: “While the mortgage market as a whole has continued its impressive recent performance, there are concerns about first-time buyers and those with small deposits being squeezed.

“Their share of the market continues to fall, which shows how important it is for lenders, government and builders to do more to support buyers struggling to get onto the ladder.”

Yorkshire offered the best chance for first-time buyers and other people with small deposits to get onto the property ladder.

More than a quarter (26.3%) of all loans went to this part of the market during November, a higher proportion than any other region.

Yorkshire was one of only two regions to see more or an equal proportion of loans go to small borrowers than their larger deposit counterparts, the other being the North West.

In the North West 25.7% of loans went to this segment, compared with 25% to large deposit borrowers while in Yorkshire the ratio was 26.3% for both.

London continued to be the market most dominated by large deposit buyers. This month 41.6% of all loans went to these borrowers, a higher proportion than anywhere else.

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