Would-be buyers who have only managed to build up a modest deposit can sometimes find it tricky to secure lending thanks to their higher risk profile. However, things finally seem to be looking up for small deposit holders, with the number of lending approvals for this group hitting a new post-recession high.
According to the latest Mortgage Monitor from e.surv, lending to small deposit holders (those with a deposit of 15% or less) increased on both a monthly and annual basis: 13,200 house purchase loans were approved during the month, up 7.4% from August (12,288) and a significant increase of 22.5% on September 2014, the highest total recorded since the recession.
The proportion of borrowing meted out to small deposit holders also increased. Small borrowers made up 18.1% of all house purchase mortgage approvals in September, a notable rise from August's total of 17.3%, making September's figure the highest proportion of small deposit holders seen since October 2008.
Most regions in the UK saw positive strides in lending towards this group, with southern regions in particular showing a healthy increase in the proportion of loans approved to these borrowers. Indeed, the Midlands was the only area to see a drop in borrowing to this demographic, but this was only marginal (down to 21% from 22% in August). Yorkshire, meanwhile, retained its crown as the friendliest location for lending to this group, with 29% of all house purchase lending in September being granted to those with deposits of 15% or less.
"September was a particularly positive month for anyone looking to buy a home with a smaller deposit," commented Richard Sexton of e.surv, something that can only benefit those who are taking their first step onto the housing ladder. "Increasing mortgage availability is widening one of the main hoops that buyers need to jump through," he added, "[which is] great news for the current cohort of first-time buyers".
If you've managed to save up a modest deposit and dream of owning your own home, now could be the perfect time to secure that mortgage and get househunting! Not only are lending figures for small deposit holders looking more positive than ever, but mortgage rates are also still at competitive lows, which means bagging a great deal now could stand you in good stead when the base rate eventually rises. Check out our first-time buyer best buys to see if you can hunt down the perfect deal.
These lending figures are also good news if you have yet to save the all-important deposit. To reach your savings goals, maximise your money by investing into a competitive savings account. A regular saver could be ideal for this as it will encourage the savings habit.
So, if you've been waiting to get a foot on the housing ladder, get saving, get househunting and make the most of the market's warmer attitude towards small deposit holders!
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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