e.surv: Proportion of loans to borrowers with small deposits up

Michael Lloyd

November 14, 2019

The proportion of loans to borrowers with small deposits, who are typically first-time buyers, rose in October, the e.surv Mortgage Market Monitor has found.

Some 29.2% of all loans were to these borrowers, up from 28.7% in September and 28.3% in August.

Richard Sexton, director at e.surv, said: “Despite the wider property market continuing its recent slowdown, the mortgage industry has maintained steady levels of activity this month.

“Rates which have fallen to a little over 1% for the cheapest 2-year fixes, have helped sustain activity.

“Competitive mortgage rates have ensured the entry of new borrowers into the market and meant that the industry has kept some semblance of momentum.”

There was also a rise in the proportion of loans approved to those with large deposits.

This group of borrowers accounted for 28.8% last month, much higher than the 27.9% recorded in September.

The movement in both small and large deposit borrowers meant that the mid-market was squeezed, falling from 43.4% to 42.9%.

As recently as August these borrowers represented 45.1% of the market.

The total number of small deposit borrowers this month was 19,249, higher than the 18,941 recorded in September.

Sexton added “It was the mid-market borrowers who saw their market share fall this month, as borrowers with both comparatively small and large deposits fuelled activity in the mortgage market.”

Yorkshire was once again crowned the most hospitable region for borrowers with small deposits.

It had a higher proportion of mortgage approvals to these borrowers than any other region during October, with 36.6% of total applications going to this sector of the market.

This put the region well ahead of the North West, its nearest rival, where 33.3% of applications were approved.

The Midlands (32.5%) and Northern Ireland (32%) were the two other areas which saw a market share of over 30% this month.

London borrowers needed the most capital to achieve their housing aspirations. Just 20.7% of loans in the capital went to those with small deposits in October.

By contrast, 35.5% of approvals in London were for borrowers with larger deposits.

Close behind was the South East, where 34.4% of all mortgages were to this group, versus just 25.7% to those with small deposits.

Sexton said: “As the number of mortgage products continues to grow, borrowers across England and Wales have seen an increase in the number of options available them.

“However, saving enough cash for a deposit remains a big issue for many.

“Those in Yorkshire benefit from a market tilted more in their favour, while Londoners face the biggest struggles in their efforts to achieve their housing dreams.”

There were 65,922 residential mortgages approved during October which was virtually flat compared to September and down 1.2% from October last year.

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