The number of mortgages approved in July was lower compared to a month ago as the market reacted to the Bank of England’s comments about an imminent base rate rise.
There were 65,356 house purchase mortgage approvals in July, down 1.8 per cent from 66,582 in June, and 0.2 per cent fewer than in July 2014 (65,517), according to the latest Mortgage Monitor from e.surv.
Small-deposit borrowers were hit harder in July as the approvals of mortgages with deposits of 15 per cent or less dropped 5.9 per cent on June and 7.1 per cent on the previous year. Small-deposit mortgages accounted for 16.2 per cent of the overall mortgage loans approved in July, compared with 16.9 per cent in June and 17.4 per cent in July 2014.
Despite the stronger decline, the proportion of small-deposit borrowers, remains relatively high, according to Richard Sexton, director of e.surv chartered surveyors.
“Smaller-deposit borrowers – typically first-time buyers – tend to be more vulnerable to change than other mortgage holders. Consequently, we have seen some slowdown in this sector. But they still remain a significant proportion of the total house purchase mortgage market, even with some understandable nervousness over the prospect of a rate rise,” he says.
More challenges for first-time buyers in East and Scotland
A regional snapshot shows that the market was most challenging to small-deposit borrowers in the East of England and Scotland.
Although lending to customers with deposits worth 15 per cent or less of their property’s total value has dipped in most UK regions in July, the blow was hardest to those in the East as well as north of the border.
A sharp series of property price rises has started to exclude some small-time borrowers in the East of England and in July the proportion of small-deposit lending in the area has shrunk to 14 per cent of all house purchase mortgage approvals, from 16 per cent in June.
The proportion of small-deposit borrowers has taken a similar-sized fall north of the border, with just 9 per cent of all Scottish house purchase mortgage approvals in July going to borrowers with small deposits, downfrom 11 per cent in June 2015.
