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Rental sector set to benefit as first time buyers lose out on mortgages
A new survey of mortgage approvals suggests first time buyers are continuing to lose out – and are thus likely to continue resorting to the rental sector for accommodation.
There were 70,511 house purchase approvals, up 1.3 per cent from the previous month and the highest since the summer, according to data produced by e.surv.
But despite the rise, lending to small-deposit borrowers – those with a deposit worth 15 per cent or less of their property’s total value, regarded as typically being first time buyers – totalled just 11,493 last month, almost exactly the same as in October. And these small-deposit borrowers are falling as a proportion of overall house purchase lending, accounting for just 16.3 per cent of approvals granted.
This November saw over 10,000 more mortgages approved to homebuyers than a year ago, with 70,511 loans – up around a fifth since November 2014.
“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” says e.surv director Richard Sexton.
Not surprisingly, the North of England remains a hotspot for small-deposit borrowing.
The North West saw the proportion of small-deposit loans rise to 26 per cent; in Yorkshire the proportion is 27 per cent.
