First-time buyer activity rises

Michael Lloyd

July 16, 2019

home sales

There were slightly more first-time buyer mortgage completions in May while the number of homemover mortgages that completed dropped, the UK Finance Mortgage Trends Update has found.

There were 30,720 new first-time buyer mortgages completed in May, 0.5% more year-on-year. Meanwhile there were 29,430 homemover mortgages in May, 1.2% less than in the same month a year earlier.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These numbers are particularly interesting because although overall mortgage activity has declined compared with this time last year, the encouraging news is that first-time buyer numbers are proving more resilient than we might otherwise have expected.

“First-time buyers are the lifeblood of the market as they buy at the bottom and trade up after a few years rather than investors who tend to buy at the bottom and tend to stay there.

“With a host of alternative options out there, advisers will be key in directing those clients that fall outside of the high street banks’ criteria to the best mortgage for their needs.”

Rob Barnard, sales director at Masthaven, added: “While political uncertainty may be impacting house price growth, the upward trend in first-time buyer home purchases highlights that the mortgage market is remaining resilient and is opening up to those wishing to step onto the property ladder.

“The specialist lending market has increased activity to ensure borrowers from all backgrounds have access to suitable products, enabling first time buyers to reach their home ownership goals.”

Louisa Sedgwick, director of sales, mortgage, Vida Homeloans, said that first-time buyers remain an important part of the mortgage market, making up the biggest part of the property market in 2018 for the first time in 23 years.

She said: “It is no surprise that they are a sector of the industry that mortgage lenders are keen to attract, with the amount of completed first time buyer mortgages rising year on year.

“With the average age of a first-time buyer now 32, the industry must continue to support those facing an uphill climb when it comes to buying a home.

“By providing affordable and sustainable rates, offering innovative, out the box thinking and diversifying product choices, lenders will continue to do their part in driving the UK first-time buyer mortgage market forward.”

There were 21,370 new remortgages with additional borrowing in May, 19.8% more year-on-year.

For these remortgages, the average additional amount borrowed in May was £52,000. Additionally, 19,650 were pound-for-pound remortgages, those with no additional borrowing. This was 19.7% more than in May 2018.

This is in line with the initial fixed rate period of mortgages coming to an end which is a prompt for customers to review their mortgage.

There were 5,500 new buy-to-let home purchase mortgages completed in May 2019, the same number as this time last year. There were 15,000 remortgages in the buy-to-let sector, 2% more than this time last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “In nearly half of all remortgages, the homeowner is taking on some extra borrowing, confirming a trend we are seeing – that people are keen to stay put and improve or extend, rather than go to the considerable cost of moving to another property.

“Some borrowers are also releasing extra cash to help children or grandchildren onto the housing ladder or to cover other costs such as school fees, with older borrowers in particular taking advantage of the sizeable equity they have built up in their homes over time.

“Buy-to-let continues its steady trend, showing that investors are sticking with the sector rather than deserting it in their droves.

“That said, we are also not seeing a flood of new landlords – rather, the experienced ones are adding to their portfolios where they see opportunities and remortgaging to keep costs down.”

Leaf attributed the increase in first-time buyer numbers to the slowdown of the buy-to-let market.

He said: “First-time buyers are also taking advantage of reduced competition from the buy-to-let market as landlords reduce activity following various recent tax and regulatory changes with several more on the way which will compromise profitability.

“They are also benefiting from almost record low mortgage rates and improving affordability.”

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