Mortgage market has reached 'new normal'

The latest data from e.surv found that the mortgage industry was now finding its feet following the EU referendum.

The UK mortgage market appears to have reached a ‘new normal’, as the industry finds its feet following the vote to leave the European Union, according to the latest Mortgage Monitor from e.surv.

While house purchase approvals dropped dramatically in the immediate aftermath of the vote, the market rebounded in August and this level of activity has remained steady into September.

The residential chartered surveyor, found that 60,011 house purchase mortgages (seasonally adjusted) were approved in September. This figure is virtually level compared to August’s figure of 60,912 although it is well down on 2015’s figure.

The number of approvals in September 2016 was 14% lower than the same month in a year ago, the survey found. It also remains well below 2016’s peak of 72,512, recorded in February, although this figure was boosted by buyers making house purchases before April’s Stamp Duty tax changes.

The proportion of loans made to borrowers with a deposit of less than 15% remains above the level seen a year ago. Some 17.9% of loans were made to borrowers with smaller deposits in September, higher than the 17.3% recorded in the same month last year. This suggests that first-time buyers are not bearing the brunt of lenders’ reduced activity.

Richard Sexton, Director of e.surv chartered surveyors, said: “Despite many predicting a post-Brexit slump in the mortgage world, the market appears to have already levelled out and there is now a platform for growth in future months.

“Policy statements from government and the Bank of England appear to have restored confidence to the market and, while activity is lower than a year ago, it is far from the disaster some had predicted. Low mortgage rates are likely to entice more people back into the market in the coming months.

“In fact, for first-time buyers the mortgage market is looking much healthier than last year. Rates are lower and lenders are approving a higher proportion of loans to small deposit borrowers than they did 12 months ago. This is great news for those trying to make their first step onto the property ladder."

Earlier today conveyancing specialist LMS released its figures on the remortgage market which it claims to have slumped following the referendum. More here.