November saw overall house purchase approvals climb to 70,511, up 1.3% from 69,630 in October.
Despite the rise, lending to small-deposit borrowers (buyers with a deposit worth 15% or less of their property’s total value) totalled just 11,493 this November, showing no improvement on 11,489 in October. Small-deposit borrowers are falling as a proportion of overall house purchase lending, accounting for just 16.3% of approvals granted, down from 16.5% in October.
The latest First Time Buyer Tracker from Your Move and Reeds Rains reveals a similar picture. First-time buyer sales have dipped by 1.7% month-on-month from 28,600 in September 2015 to 28,100 in October 2015.
Richard Sexton, director of e.surv chartered surveyors, commented: “The Chancellor’s proposals coincided with a climb in November’s mortgage market. More prospective homebuyers are finding their applications successful as we near winter.
However, for first-time buyers it’s a different story. For those struggling to get their foot in the front door, promises of starter homes are of little consolation. Theoretically, first-time buyers should be benefitting from measures such as the extended Help to Buy Scheme and the Help to Buy ISA which has finally come into force – but homeownership still remains a distant dream to many.
Mortgages may be available, inflation low and wages rising – but whether there are enough homes is another question. Supply must be addressed if aspirational homeowners are to see a real difference and only time will tell if words can translate into real benefits for first-time buyers.”
This November saw over 10,000 more mortgages approved to homebuyers than a year ago, with 70,511 loans, jumping a fifth since 59,262 in November 2014. This was the highest year-on-year rise seen since March 2014, as the lending market goes from strength-to-strength amid rising confidence.
On an annual basis, this jump in overall home purchase lending has allowed an improvement in small-deposit lending. Home purchase lending to borrowers with smaller deposits grew 44% year-on-year from November 2014 (8,000 approvals). However, the current total for small-deposit loans, which stands at 11,493 this November, is much smaller compared to the unsustainable pre-recession heights of November 2007, when 16,227 were granted.
Richard Sexton added: “When compared to last year, mortgage lending is in a much healthier place. Twelve months ago, home buyers were still suffering from the impact of MMR changes, which had caused delays for lenders and deterred borrowers at the same time. However, we have emerged out of the other side into a much stabler lending climate as a result of these measures – with ‘adventurous’ pre-recession mortgage approvals largely a thing of the past.
Some small-deposit borrowers are still struggling and with house prices predicted to keep on rising there’s a real risk many may be permanently priced out of homeownership. In order to stop this, more needs to be done to remove obstacles facing homebuyers – particularly large deposit costs. For many, saving for hefty deposits can be financially crippling and so low deposit options are needed to give first-timers a lift onto the property ladder. Of course, the most effective way to reduce deposit costs would be a slowing of house price growth giving buyers’ savings a chance to catch-up.”
