First-time buyer mortgages down 3.6% year-on-year

Michael Lloyd

August 14, 2018

There were 34,900 new first-time buyer mortgages completed in June, some 3.6% fewer than in the same month a year earlier, UK Finance’s Mortgage Trends Update for June has found.

The £5.8bn of new lending in the month was 1.7% down year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000.

There were 33,700 new homemover mortgages completed in the month, 7.9% fewer than in the same month a year earlier.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The journey is not particularly exciting at the moment as buyers and sellers are sitting on their hands reluctant to commit unless exciting opportunities present themselves or moves are needs-driven.

“Nevertheless, no major correction is anticipated and realistic pricing is helping to keep the market ticking over, though lack of urgency remains a concern.

“Unfortunately, first-time buyers are not completely replacing the dwindling number of buy-to-let investors as the latter face tax and regulatory changes. The rise in remortgaging is more of a defensive move to counter the imminent threat of higher interest rates, which proved accurate.”

There were 37,400 new homeowner remortgages completed in the month, some 8.4% more year-on-year and similarly, the £6.8bn of remortgaging in the month was 13.3% up year-on-year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Remortgaging numbers were strong in June, both on residential and buy-to-let mortgages, as borrowers rightly worried about an impending rate rise.

“Now that rates have gone up this month, we expect to see remortgaging continue to be popular as those who haven’t got around to doing so finally take the plunge.

“With most lenders pricing in the base rate rise before it actually happened, the good news for borrowers is that fixes in particular are still very competitive. Now is a good time to fix – whether it’s for two, five or even 10 years – protecting borrowers from any future rate rises.

“Buy-to-let continues to be a challenge with the harsher tax and regulatory environment putting off novice investors. But there are still seasoned landlords committed to the sector for whom it is business as usual.”

There were 5,400 new buy-to-let home purchase mortgages completed in the month, some 19.4% fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1% down year-on-year.

There were 12,600 new buy-to-let remortgages completed in the month of June, the same as June 2017. By value this was £2.0bn of lending in the month, the same year-on-year.

Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging continued to dominate in June with figures up 13% on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.

“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first time buyers and homemovers as customers adopted a ‘wait and see’ approach.

“House price inflation has moderated in recent months yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.

“And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”

Mike Scott, chief property analyst at estate agent Yopa, said: “Since market activity has reduced for both buyers and sellers, we expect that there will be little impact on house prices, and 2018 will end with slightly fewer house sales than 2017, but with prices slightly higher.”

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