Residential mortgage approvals dip in January

The number of approved residential mortgages dipped to 66,002 in January compared to the previous month, according to the latest Mortgage Monitor from e.surv.

The residential chartered surveyor revealed this was down by 1.8% compared with December’s figure – and suggested it could reflect that January is ‘typically a slow month’ for the mortgage market.

The data also showed that remortgage activity grew, with borrowers switching to new lenders and sealing lower rates at the start of the year. E.surv said this caused a spike in the proportion of loans being taken out by mid-market customers during January.

e.surv’s figures also showed that small deposit borrower – a group which encompasses many first-time buyers – also increased their market share from 25.5% to 26.7%.

e.surv director, Richard Sexton, commented: “While the market fell slightly following the December bump, rumours of a Bank of England base rate cut appear to have had little appreciable impact on the mortgage market, with a strong performance among several key buyer groups in January.

“Existing homeowners benefited from low remortgage rates and were persuaded to switch to a new deal, while new buyers also swooped to seal low interest rates for their first purchase.

“The new Chancellor is due to present the Government’s Spring Budget in March – the first opportunity for the Johnson government to lay out its spending plans. Homeowners, lenders, housebuilders, and anyone else with a stake in the UK housing market, will be watching with interest.”

e.surv’s Mortgage Monitor also revealed a rise in the percentage of loans taken out by borrowers with a small deposit in January, with 26.7% of all loans belonging to this section of the market, higher than the 25.5% recorded during December.

The proportion of loans approved to customers with large deposits fell from 27.3% of the market in December, to 25.5% in January – with e.surv highlighting this meant there was a small increase in mid-market borrowers at the start of 2020.

In total, 47.8% of mortgages went to midmarket customers, higher than the 47.2% rate found in December, while on an absolute basis, e.surv’s data showed the number of small deposit borrowers was 17,623, a figure higher than the 16,895 recorded during the previous month.

“January saw an increase in approvals for small deposit buyers,” Sexton added. “Typically, an indication that more first-time buyers have made their first step onto the property ladder.

“We have also seen a shift towards the midmarket as those able to pull together sizeable deposits, often existing homeowners, secure cheap mortgage deals at the start of the year.”

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