Mortgage Approvals Down in April
A combination of Brexit, tougher taxation rules and economic uncertainty has had a substantial impact on house purchase approvals in April 2016. Seasonally adjusted figures from e.surv, one of the UK’s largest valuation providers, show that the total number of approvals in April was 57,512. Down 19.4% from the 71,357 loans granted in the previous month, and the previous three month average of 72,693.
The Chancellor’s new SDLT rules which came into effect in April, led to a flurry of Buy to Let transactions in March by investors eager to beat the deadline. Now that the 3% surcharge is in place those investors have paused to draw breath. Despite the overall fall in approvals, First Time Buyers (FTB’s) look to be stepping up their activity and attention is now focussed on the bottom of the ladder. FTB sales were 32,500 in March, up an incredible 47.7% on the previous month and whilst FTB activity is not yet available for April, Small Deposit Lending (where deposits are 15% or less of the home value) accounted for 19% of the overall approvals. Up from 17% the previous month.
Encouragingly, save for the South East, FTB borrowing looked to have increased in every region of the UK with biggest gains made in Northern Ireland, up 30%, and Yorkshire and the North West, up 28% respectively. Predictably though, Small Deposit Lending was at a depressingly low 9% in London.
Richard Sexton, a director of e.surv chartered surveyors, comments: “With the buy-to-let sector finally stepping out of the spotlight, attention is turning to the bottom of the property ladder. This shift has already begun, with the number of deals available for first-time buyers rising quickly, bringing a range of new choices. At the moment, first-time buyers don’t appear reluctant to take advantage of new options, whether they be government schemes such as Help to Buy or new mortgage deals. Concerns may be being raised about this new variety of offers, and as ever lenders and borrowers should adopt a cautious approach – particularly if the course of interest rates becomes even less certain.