Mortgage approvals are up both year-on-year and month-on-month from February to March, despite purchases and sales continuing to be subdued, e.surv’s Mortgage Monitor has found.
Some 66,174 mortgages were approved during March 2019 (seasonally adjusted), 4% higher than the same month a year ago and across all parts of the market, approvals were also up month-on-month, rising 2.9% between February and March.
Richard Sexton, director at e.surv, said: “Mortgage rates have increased slightly compared to the rock-bottom lows of the last few years.
“However, rates are still close to their historic lows which is good news for those looking to take their first steps. This is reflected in the number of approvals this month.”
Low rates have created favourable conditions for existing homeowners looking to take out new loans, and first-time buyer activity has increased, despite the slowdown in the wider market. Across all parts of the market, approvals were also up month-on-month, rising 2.9% between February and March.
E.surv defines mall deposit borrowers as those with an LTV of 85% and above, mid-market borrowers as having an LTV of 60-85% and large deposit borrowers those with an LTV up to 60%.
The proportion of loans given to small deposit borrowers fell slightly compared to the last survey, but still represents a significant share of the mortgage market.
The number of loans to these customers dropped from 26.3% to 26%.
The recent squeeze on borrowers with large deposits continued into March, with the proportion of loans going to this part of the market falling once again.
Some 26.2% of all mortgages were taken out by this type of borrower in March. This is down on the 26.9% recorded in February. This is even further back from the 28.1% ratio seen in January and the 30.1% found in December.
This fall, coupled with the modest drop in small deposit lending, meant that mid-market borrowers were the main beneficiaries.
Almost half of all loans went to this segment of the market – 47.8%. This is higher than the 46.8% recorded a month ago and further ahead of the 44.8% from January. On an absolute basis, the number of small deposit borrowers fell from 17,480 to 17,205 between February and March.
Sexton added: “With almost half of all mortgages going to midmarket borrowers, it is clear that many current homeowners are still coming to market for new loans.
“This may be because they are keen to lock into loans at the current historically low rates in the hope that it will save them money in the long term.”
The region of Yorkshire is the best place for first-time buyers and others with small deposits to get onto the ladder.
Some 33.4% of all loans in Yorkshire went to these customers, more than any other region. Yorkshire also topped the table in January and February, meaning the region’s unbeaten streak has lasted the first quarter of 2019.
Elsewhere, 32% of loans in the North West went to this market segment. All other regions scored below 30% in March.
At the other end of the scale, just 16.7% of mortgages in London went to this part of the market. London was dominated by those with large piles of cash as a deposit.
Some 35.2% of mortgages in the capital had a large deposit this month, although this figure was down compared to the 36.8% recorded last month. After London, the South East was the area which was most dominated by large deposit borrowers.
They occupied 31.1% of the market this month, it was the only other part of the country where large deposit customers had more than a 30% market share.
Sexton said: “While most people have family and work ties which mean they must purchase a property in a specific area, for those able to choose where to live, Yorkshire is proving an attractive place to buy.
“With low purchase prices and good first-time buyer affordability, the region was more tilted in favour of young borrowers than any other during March.
“London buyers have a much tougher time, with this market stacked toward those with more cash to spare.”