South West, Wales overtakes London in UK mortgage approvals

House purchase approvals in the UK grew slightly for the first time in three months in September, as the purchase market regained some strength after a summer slowdown, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 65,469 house purchase approvals in September,  two per cent higher than 64,212 in August 2014. It marked the first month of house purchase approvals growth since June 2014, following monthly declines in both July (-1.2 per cent) and August (-2.9 per cent) caused by a dip in demand over the holiday season.

Despite this pick-up, house purchase approvals dipped marginally by 1.8 per cent on an annual basis in September.

Richard Sexton, director of e.surv chartered surveyors, explains: “The purchase mortgage market is putting the recent regulatory changes into the rear view mirror as we move into autumn. Approvals declined over the summer, as demand dropped off over holiday season. And the changes introduced in the Mortgage Market Review also took a few months to settle down. But looking ahead, the road looks steady. We are still a way off where we should be, but there are reasons to be optimistic.”

September marks 20 consecutive months of annual growth for higher LTV loans.

There were 11,588 house purchase approvals to borrowers with a deposit worth 15 per cent or less of the total value of their property in September, 1.4 per cent more than 11,430 in August 2014.  It was the second highest monthly number of higher LTV approvals since June 2008, with June 2014 the only month to outstrip September. Higher LTV approvals have now risen 12 per cent since the start of the year.

September also marked the twentieth consecutive month of annual higher LTV growth.

Despite much of the mortgage approval market suffering from a summer slowdown, higher LTV borrowers have not been as deterred. Higher LTV lending doubled year-on-year in September, up 44.8 per cent from September 2013.

Richard Sexton, director of e.surv chartered surveyors, explains: “First-time buyers are the backbone of the UK’s mortgage market and the foundation on which the mortgage market’s post-recession recovery has been built. But after an extended period of flat wages, low interest rates and high inflation, many of them are still struggling to save for a deposit. Help to Buy has provided a route around that barrier. It is enabling worthy, responsible borrowers – many of whom are being held back from the property market by the economic downturn – a chance to get onto the ladder regardless.

“A long term commitment to Help to Buy, complimented by more new housing supply, will help keep first-time buyers in the ring. But further regulation is fast approaching. The Bank of England’s new loan-to-income caps are set to come into full force at the beginning of October. They could rule a host of borrowers back out of the market, despite the best efforts of Help to Buy to keep it wide open. Prudence and opportunity must be balanced.”

UK rebalancing mortgage market

The distribution of mortgage approvals throughout the UK is beginning to rebalance, as London and the South East start to lose their dominant share of approvals.

September saw the South West & Wales region overtake London as having the greatest proportion of UK mortgage approvals, with 16.2 per cent of all approvals. London’s share of UK mortgage market approvals in September was 16 per cent, down 2.1 per cent from 18.1 per cent in September 2013.

Regions such as the Midlands and Yorkshire have also seen their proportion of UK house purchase approvals increase, proof that Help to Buy is transforming the property market outside of London. The North West has particularly benefited from the government scheme, and the proportion of higher LTV house purchase approvals in the region has risen 8 per cent since September 2013 as a result.

Richard Sexton, director of e.surv chartered surveyors, explains: “Help to Buy has stirred new vigour into much of the dormant property market, waking up many regions from housing market hibernation. We are now seeing areas of the country previously forgotten in the property market recovery experiencing a surge in demand, largely thanks to Help to Buy. Young, low income and first time buyers are now looking for first homes across the country, taking advantage of lower house prices in much of the UK.

“London’s grasp of the property market has shown signs of loosening, which is welcome for some around the country looking for their ideal home. Yet this countrywide rebalancing does come with warning signs. London and the South East must look to increase their supply in future years or else face a market closed to many. The lack of first-time buyers in such areas is of course no surprise. There is much more to be done in both the lending of mortgages and building of homes.”


Region

Sep-13

Sep-14

South West & Wales

17.7%

16.2%

London

18.1%

16.0%

Eastern

12.9%

13.3%

Yorkshire

9.3%

13.0%

Midlands

12.0%

12.3%

South East

12.4%

11.3%

North West

10.4%

11.3%

North East & Cumbria

4.9%

3.6%

Scotland

1.5%

1.9%

Northern Ireland

0.7%

1.0%

Region

Proportion of loans that are high LTV

North West

28%

Yorkshire

26%

North East & Cumbria

25%

Midlands

21%

UK Average

18%

Eastern

17%

Northern Ireland

16%

South West & Wales

15%

Scotland

14%

South East

13%

London

7%

(Home page image courtesy Shutterstock)

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