The latest data from residential chartered surveyors, e.surv, has revealed that first-time buyers and other borrowers with 15% deposit or smaller saw their share of the mortgage market rise to 18.7% in January 2017.
This is higher than last month – when these borrowers held 16.1% of the total market – and even further ahead of January 2016, when this figure was 14.5%.
The overall size of the mortgage market remained steady between December and January. A total of 67,430 house purchase loans (seasonally adjusted) were approved by lenders this month. This is fractionally down on the 67,505 approvals recorded in December but 7.7% lower than a year ago.
Richard Sexton, Director of e.surv chartered surveyors, had this to say: “Typically, the new year heralds a fresh start for those considering taking out a mortgage, and small deposit buyers are now taking more share of the market than both last month and the same point a year ago.
First-time buyers are benefiting from historically low mortgage rates and this is helping more people onto the property ladder for the first time. Government schemes such as the Help to Buy ISA are also providing support for those still saving for their deposit.
Areas in London and the South East that have seen dramatic price rises in recent years, are starting to see this price growth slow. This is also helping more people in those regions to achieve their housing aspirations.”
Over a third of loans go to large deposit buyers
Despite the strong growth in the small deposit buyer market, those with larger deposits continue to dominate the UK mortgage market.
These borrowers – defined as those with a deposit of 60% or more – represented 35.4% of all mortgage approvals in January. This was marginally down on the 35.7% recorded in December and further back from the 36.2% seen in November.
However, the dramatic rise in small deposit buyers means that it is the mid-market section of the market which took the biggest hit this month.
In absolute terms, 12,609 small deposit buyers saw their mortgage applications approved in the first month of 2017. This is substantially above the 10,868 recorded in the previous month.
Richard Sexton, said: “The government is making all the right noises in terms of increasing housing supply, but words need to turn into action if the housing market is to work for all. A boost to the number of first-time buyer homes will contribute to getting the whole market moving.”
Yorkshire is small deposit hotspot
Yorkshire was the region with the highest proportion of small deposit buyers in January, replacing the North West at the top of the chart. Small deposit buyers made up 31.6% of the total market in Yorkshire this month, compared to just 24% in December.
The North West was the next most fertile ground for these buyers – with 27.2% of all loans going to those with small deposits. The Midlands completed the top three, with 23.7% of loans going to first-time buyers and similar borrowers.
Yorkshire and the North West were the only two areas of the UK which saw more loans going to small deposit borrowers than large ones.
At the other end of the scale, just 17.2% of loans in Scotland went to buyers with deposits of 15% or less. This was ahead of Eastern England (18.8% of all loans) and the South and South Wales (20.2%).
There were five regions where large deposit buyers took more than a third of the total market in January 2017. Scotland was the most dominated by these borrowers (38.4%) followed by Eastern England (37.0%) and South and South Wales (36.8%).
London – with 36.7% of all loans - and the South East (35.3%) were the other areas with more than a third of buyers having a 60% deposit or bigger.
Richard Sexton, concludes: “Yorkshire is the best location to buy a house if you’ve got a small deposit. This was one of only two areas (the North West being the other) to have more small deposit buyers than big ones. Both of these areas are great places to make your first step onto the property ladder.”