New mortgage approvals dipped slightly in January, after a strong performance in the previous month, according to data from e.surv.

e.surv, the UK’s largest residential chartered surveyors, published its latest Mortgage Monitor for the new year, suggesting that 66,002 new mortgages were approved last month. This was down 1.8 per cent on the figure seen in December, possible reflecting the seasonal slowdown often seen in January.

Despite this, remortgaging activity accelerated, as borrowers opted to switch from lender to lender, and lock in low interest rates at the start of the year, to finance future borrowing. As a result, e.surv reported that there was a spike in the proportion of loans taken out by what they term mid-market customers.

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Last month, insurance provider LV= revealed that those aged 65 and over were increasingly using options like equity release to pay down debts and mortgages.

First-time buyers take increasing share

First-time buyers, who are often in favour of borrowing small deposits, saw an increase in their market share, when it came to mortgages, from 25.5 per cent in December to 26.7 per cent last month.

e.surv noted that speculation about a potential Bank of England (BoE) interest rate cut earlier in the year seemed to have little effect on sentiment. The BoE ultimately decided to keep interest rates stable, citing signs of economic recovery.

Richard Sexton, director at e.surv commented: “Existing homeowners benefited from low mortgage rates and were persuaded to switch to a new deal, while new buyers also swooped to seal low interest rates in their first purchase.”

First steps on the housing ladder

Prospective buyers now look to the upcoming Spring Budget, expected to be delivered by the new Chancellor of the Exchequer, Rishi Sunak, on 11th March. Mr Sunak succeeded Sajid Javid, following a Cabinet reshuffle.

Mr Sexton added: “Homeowners, lenders, housebuilders and anyone else with a stake in the UK housing market will be watching with interest.”

An increase in approvals for small deposit buyers was viewed by e.surv as an indication that more first-time buyers were finally starting to take their first steps on the property ladder. In December, there had been 16,895 small deposit borrowers as termed by e.surv, but this grew to 17,623 in January.

A trend of low interest rates and mortgage rates, combined with increased activity from prospective first-time buyers suggested a mood of optimism in the mortgage markets, but the Budget next month is being viewed with suspicion by some.

This is because the Government was reportedly considering introducing a new Mansion Tax earlier in the month – when Property Notify reached out to the Treasury for clarification on this matter last week, the Treasury responded, saying: “All taxes are under review.”

In the meantime, mortgages remain cheap and housing supply remains low, pulling in more buyers, as well as pushing house prices higher.

Low levels of stock in London’s prime property market were noted by Savills, with demand for flats remaining especially strong, while buyers started looking towards more lower-value prime properties.

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Steven Taylor
Steven reports on the daily churn of the property news cycle, often reporting on the stories you may have missed during the week. He covers a range of topics, including market sentiment, new findings and announcements by policy-makers.

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