Mortgage market remains strong

Mortgage market remains strong

The health of the mortgage market is generally a good indicator of how strong the overall housing market is, and this week brought two pieces of encouraging news on that front.

The first is that the number of mortgage approvals for first time buyers increased in September, and the share of the market claimed by first time buyers was also larger overall compared to the previous month.

According to residential chartered surveyors e.serv, the proportion of large deposit borrowers – defined as those with at least a 60% deposit – fell to 30% whilst the amount of small deposit borrowers rose to almost 25%; the majority of these borrowers are first time buyers by definition.

Four regions in particular – Northern Ireland, the North West, Yorkshire and the Midlands – saw a greater than average number of loans going to first time buyers.

Richard Sexton, director at e.serv, pointed out that a small slowing in the rate of house price growth in many parts of the country may have been behind the ability of more first time buyers to get on the property ladder.

However, if this is the case then it is likely that predicted house price growth in the future will cause a return to normalcy where first time buyers begin to find it harder to purchase a home once again.

The second piece of good news from the mortgage market concerns buy to let mortgages. In a climate where some casual buy to let landlords are weighing up their future in the sector due to scare stories in the media, news that the average five year fix mortgage for property investors has fallen to 3.4% is welcome.

This is the lowest rate on record and should reassure buy to let investors that the market remains popular and that confidence in the sector remains high. The research from Moneyfacts notes that a rise in rates was expected due to there being two base rate rises in the last 12 months as well as multiple tax changes, but that expectation was confounded.

It appears that now is a good time to get a mortgage and, consequently, a good time to either be entering the housing market or expanding your existing portfolio.

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