House purchase lending up 20% year-on-year

This represents the highest monthly total since January 2014 – the last month when the Bank of England offered support to mortgage lenders via the Funding for Lending Scheme (FLS). September 2015 has seen 72,930 house purchase lending approvals, while in January 2014 there were 75,691 approvals.

Since the previous month of August, which saw 71,030 house purchase approvals, this number has increased at a month-on-month pace of 2.7% – taking annual growth in the number of approvals to 19.8%.

Richard Sexton, director of e.surv chartered surveyors, comments: “Mortgage lending is enjoying a late summer. After record house purchase lending through the summer months, the numbers suggest that confidence within the UK housing market is still steadily strengthening. With interest rate speculation dying-down and a rate hike before next year appearing increasingly unlikely, lenders appetite for growth appears unchanged.

This increase is both tempered by and benefiting from new regulations, including the Mortgage Market Review changes which came into effect earlier this year. Levels of High LTV lending are stable and reflect a steady, rather than a volatile pace of growth.

It’s not just lenders who have been affected by a calmer financial outlook  in recent months, prospective mortgage borrowers have seen their potential savings bolstered by low inflation rates and a recovering economic climate.”

Comparisons with the previous high in January 2014 underscore this point. Today’s progress isn’t the result of a final gasp of artificial support from the likes of Funding for Lending – but represents seven years of gradual rebuilding and consolidation by mortgage lenders.”

Small-deposit lending reaches highest level since October 2008

Setting a new post-recession record, September saw the amount of small-deposit lending (to buyers with a deposit worth 15% or less of their properties’ total value) increase both monthly and annually.

In the highest proportion since October 2008, small-deposit borrowers made up 18.1% of overall house purchase mortgage approvals in September. This compares with 17.3% of August’s total approvals.

In absolute terms there were 13,200 small-deposit house purchase loans approved in September, up 7.4% from August’s figure of 12,288. This is a 22.5% higher number than in September 2014. This total is also the highest post-recession level of small-deposit mortgage lending when measured in absolute terms.

These increases particularly benefitted first-time buyers. The latest First Time Buyer Tracker from Your Move and Reeds Rains reveals that August 2015 saw 30,200 first-time buyer sales –  rising by more than a quarter (27.4%) since May 2015.

Richard Sexton comments: “September was particularly a positive month for anyone looking to buy a home with a smaller deposit, even when compared to more generally benign conditions.

A more active mortgage market won’t directly build more homes. Deeper reforms to planning and skills are still needed to help that side of the equation if more demand via mortgage lending isn’t simply set to push up prices faster in turn.  Increasing mortgage availability is widening one of the main hoops that buyers need to jump through. Especially for the current cohort of first time buyers, this is great news.”

Regional snapshot: Small-deposit lending on the rise in the South

September has seen an increase in lending to those with deposits worth 15% or less of their property’s total value in most UK regions, with southern regions showing the most significant increase.

The South, South East and South Wales are improving as locations for small-deposit borrowers, with all seeing an increasing proportion of total house purchase lending for these borrowers. In the South East, small-deposit borrowers now represent 14% of all house purchase borrowers, up from 12% in August. South Wales and the South experienced the same percentage rise, up 2% from last month, with 17% of all house-purchase lending for small-deposit borrowers.

Yorkshire continues to retain its position as a haven for first-time buyers and similarly small-deposit borrowers, who represent 29% of all house purchase lending – only the Midlands witnessed a marginal decline in the proportion of small-deposit borrowers within total house purchase lending.

LOANS FOR HOUSE PURCHASE - seasonally adjusted