E.surv has reported a positive start to 2018 for the UK mortgage market, with an increase in the number of small deposit borrowers being approved.
The latest Mortgage Monitor from e.surv found that 21% of all approvals went to small deposit buyers, well above recent months. In December 2017, 18.2% of loans were to this part of the market while the month before it was just 17.2%.
January’s data is the second full month of data following the Bank of England’s decision to increase the base rate to 0.5%. This rate rise, plus the speculation in the weeks leading up to the decision, has spurred many people into taking action, either looking to take out a mortgage or switching to a new deal, e.surv said.
These customers have now started to filter through to the approvals data, given the length of time it takes for a mortgage application to complete. The latest data reports there were 66,484 mortgages approved (seasonally adjusted) during January 2018.
Richard Sexton (pictured), director at e.surv, said: “We are now starting to see the effects of the Bank of England’s decision to increase the base rate filtering through to the market.
“While it is now two months on from the base rate rise, we are starting to see those who were alarmed by the talk of increased rates finalise new mortgage deals, whether with their existing lender or elsewhere.”
As the proportion of small deposit loans rose, there was a fall in the amount of approvals to those with large deposits.
In December 35.9% of all mortgage approvals went to large deposit buyers – defined by this survey as those with a deposit of 60% or more. One month on and this had dropped to 33.5%. This continues a recent downward trend from the 36.5% rate recorded in both October and November.
The proportion of loans going to mid-market borrowers also fell slightly, compared to December. In January this market segment represented 45.5% of the overall market, lower than the 45.9% figure found a month ago.
On an absolute basis, the survey recorded that there were 13,962 loans to small deposit borrowers during January 2018.
Sexton said: “First-time buyers and others with smaller deposits have experienced a strong start to the year, with the proportion of loans rising compared to the end of 2017.
“While other types of borrowers have been squeezed, the larger overall mortgage market means that more people are getting approved than a month ago.”