Remortgage deals are currently the main area of activity in the mortgage market as the wider housing market slows, according to recent data from chartered surveyors e.surv.
There were 65,770 residential mortgages approved during July 2019, up 0.8 per cent year on year, but down 1 per cent compared to June 2019’s total.
Despite this slowdown, historically low interest rates have bolstered the remortgaging market, with some small deposit buyers also benefitting from the wide range of mortgage products available to them, e.surv claims.
Good time for buyers
In July, 27.9 per cent of all mortgage completions were carried out by small-deposit borrowers, with Loan-to-Value ratios of 85 per cent and above. This was unchanged from the previous month but higher than the 27.7 per cent recorded in May.
Richard Sexton, director at e.surv, commented: “Current mortgage rates remain at a historically low level and this certainly appears to be tempting some new borrowers into the market. For those who already own a home, these rates have encouraged many existing homeowners to remortgage at a low rate and give themselves security over their payments in the coming years.”
Mr Sexton added: “These rates, coupled with a general slowdown in house price growth, are helping more young buyers, who are often strapped for cash, onto the ladder. Despite this, the market for purchase mortgages remains largely flat.”
There was also a substantial increase in the market share of borrowers with large deposits, up from 24.7 per cent in June to 26.6 per cent in July. The proportion of large-deposit borrowers also increased slightly from 24.3 per cent in April to 24.5 per cent in May, according to e.surv.
Small deposit loans vary by region
Yorkshire was the best location for buyers with a small deposit, with as many as 35.4 per cent of all mortgages in that region going to those with small deposits, followed by Northern Ireland at 34.5 per cent, the North West at 33 per cent and the Midlands, where the share of small deposits stood at 32.1 per cent.
At the other end of the scale, London recorded the smallest proportion of these borrowers, at 17.7 per cent. The capital also had the highest proportion of large-deposit buyers, with 33.6 per cent of all mortgage approvals going to this part of the market, putting it slightly ahead of the South East, at 30.9 per cent.
On this subject, Richard Sexton commented: “First-time buyers tend to have a much easier time getting onto the ladder in the North of England and Northern Ireland. Lower purchase prices often help these borrowers onto the ladder earlier in life, meaning we see greater activity in northern areas at a younger age.”
He added: “However, it is not all doom and gloom for those based in other regions. Pockets of value exist in all parts of the country, meaning those with smaller deposits can often find a way to get onto the ladder.”