The latest Mortgage Monitor from e.surv has revealed that October 2015 saw the highest October lending levels for the past seven years with approvals rising on both a monthly and annual basis.
Last month, overall house purchase lending approvals reached 72,409. This represents a new 22 month record, with the highest total seen since 75,691 approvals in any month since January 2014, and the most in any October since 2008.
On a monthly basis, the number of house purchase approvals has increased by 5.1% from September 2015, which saw 68,874 approvals – taking annual growth to 21.9% since October 2014’s total of 59,392.
Richard Sexton, director of e.surv chartered surveyors, said: “Autumn has already beaten summer lending levels, with the housing market slowdown seen after MMR now firmly in the shadows. Lenders aren’t shying away from supporting buyers and appear confident that lending volumes will grow in 2016.
“Interest rate rises look set to be a topic of conversation as we approach the end of the year. With the latest forecasts predicting rates will remain lower for longer, the great deals on offer look likely to stay on the market and further delays mean more time for both borrowers and lenders to prepare for future increases.
“The increasing number of approvals has been driven by the improving prospects of mortgage borrowers, who continue to benefit from low inflation rates and rising wages – giving them more confidence to apply for mortgage finance. It’s this appetite which is contributing to a flourishing mortgage lending environment.”
Small-deposit lending (to buyers with a deposit worth 15% or less of their property’s total value) has decreased by 4.2% from 12,466 in September, but has grown substantially (+31.2%) year-on-year from 9,103 in October 2014 to reach 11,947 approvals this month.
This total is the highest figure of small-deposit lending approvals seen in the month since October 2008, which saw only 6,540 approvals.
Small-deposit loans also totalled 16.5% of overall house purchase lending in October 2015, slightly down when compared to 18.1% of approvals in September. This proportion set a post-recession record for October small deposit lending, charting a significant improvement across the previous seven years.
This picture follows the latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains, which reveals first-time buyer sales for September 2015 totalled 24,800 – decreasing 9.8% month-on-month from 27,500 transactions in August.
Sexton said: “October still remained a positive month for first-time buyers, despite a slight dip in lending to them. The good news is that it is still a great time to buy for first-timers, looking to the future. The government is delivering on promises to help first-time borrowers get on the ladder – with December’s upcoming Help to Buy ISA Scheme the latest Government scheme.
“The recovering economy is helping first-time buyers to save and it is encouraging to see high lending levels throughout October. However, increased mortgage lending can only do so much and when it comes to buying, yet again supply remains an unsolved issue. Affordable housing for first-time buyers needs to be a priority – across the entire country.”
October has experienced a small decline in lending to those with deposits worth 15% or less of their property’s total value in most UK regions, with Northern Ireland the only location to see a proportional increase and the Midlands the only region in England to withstand a fall.
Northern Ireland witnessed a 2% monthly increase in the proportion of small-deposit loans granted, rising to 23% in October 2015 from 21% in September to overtake the Midlands.
In England, Yorkshire and the Northwest remain the best locations for small-deposit borrowers to secure a loan. In Yorkshire, small-deposit loans make up over a quarter of all house purchase approval lending, at 26% in October 2015. Despite, seeing a monthly fall of 3% from September, the region still retains its top position. The Midlands managed to withstand the country-wide fall and small-deposit loans continue to make up 21% of total lending.
London continues to be a difficult place to secure a large mortgage. Just 7% of October’s total house purchase approval lending was to small-deposit borrowers and this shows little sign of improving. Despite only dropping 1% from September, the region found itself in last position.