The August 2015 number of mortgage approvals for house purchase was at its highest in 18 months, according to the latest Mortgage Monitor from chartered surveyor e.surv.
There were 69,220 approvals in August, the highest monthly number since February 2014 (70,239) and 9.3 per cent higher compared to August last year (63,340).
Month-on-month the change was marginal, up by just 0.7 per cent compared to July’s 68,764 approvals.
The figures show a continuous rise in approvals since the General Election in May and it seems lending is not affected by concerns over a potential increase in interest rates in the near future.
August best month for small-deposit lending since 2008
Small-deposit borrowers had something to celebrate in August, as the number of approvals for mortgages with deposits of 15 per cent and below reached its highest level since April 2008.
There were 11,975 small-deposit mortgages approved last month, a rise of 7.5 per cent compared to July 2015 and of 6.2 per cent compared to August 2014.
Small-deposit borrowers, who typically are first-time buyers, now represent 17.3 per cent of all house purchase mortgage approvals. This is the highest proportion recorded since September 2014 and 16.2 per cent higher than in July 2015.
Small-deposit lending highest in Yorkshire and Northwest
Yorkshire and the Northwest are the heartland for small-deposit borrowers, e.surv says, referring to the growing share of approvals for this type of customer.
In Yorkshire, small-deposit borrowers now represent 27 per cent of all house purchase borrowers, up from 25 per cent in July. Similarly, in the Northwest, small-deposit borrowers represent 26 per cent of all approvals, up from 25 per cent in July.
Commenting on the latest research, e.surv’s director Richard Sexton, said:
“While the global economy has been walking on eggshells as China’s economy stalls, the UK housing market has been striding forward on much firmer ground. Weak inflation and recovering wages mean that more British workers are able to meet the stringent affordability requirements demanded by MMR and obtain the mortgage they want. This latest resurgence of demand is pushing up prices. What’s more, banks are supporting those borrowers that need finance, and many record-low rates remain. It‘s a good time for many potential new buyers to get a mortgage and think about taking a first step on the ladder.
“Concerns over an interest-rate rise may have helped push some borrowers into acting quickly. However, this is now the third consecutive month of growth, and home lending has been strong since May, now that the uncertainty that surrounded the election has evaporated. Healthier mortgage lending reflects a stronger UK economy and an upturn in fortunes for British buyers.
“First-time buyers have seen a revival over the last few months, buoyed by an increase in lending to small-deposit borrowers. This first-time buyer boost is largely the result of pent up demand, with many buyers finally able to afford their first foot onto the ladder after years of scrimping and saving. Further financial help schemes are being lined up for release, and the Help to Buy ISA may spark further interest from first-time buyers when it comes into play at the end of the year.
“But the Government could do much more to earmark sites for the development of affordable housing, as it is first-timers who are paying the steepest price to get on the ladder, as house price inflation pushes prices upwards. Encouraging the older generation to downsize could be one answer. This would free up larger family homes, increasing activity across the market and in turn, release more first-timer properties for new buyers.”
