First-time buyers are fixing for longer

Michael Lloyd

February 19, 2018

First-time buyers are fixing their mortgage for longer than a year ago, Accord Mortgages found.

The number of applications the lender received for 5-year fixes from first-time buyers has more than doubled year-on-year, with 51% of all first-time buyer applications being for longer term deals last month compared to 20% in January 2017.

In contrast the number of would-be homeowners seeking to fix for two years declined year-on-year, with Accord receiving 48% of applications for this loan term in January. This was compared to 63% in the first month of last year.

Additionally, Accord’s figures suggest that first-time buyers’ deposits have grown slightly within the last 12 months.

Ben Merritt, mortgage manager at Accord, said: “Recent figures from UK Finance showed the highest number of first-time buyers in the housing market in a decade in 2017, so this market is currently in a really strong position.

“It’s pleasing to see more first-time buyers getting their foot on the property ladder and is perhaps unsurprising that the numbers continue to rise given the recent changes to stamp duty and November’s Bank Rate rise.

Appetite from new homeowners with a 15% deposit increased the most, by 7%, while 90% loan-to-value mortgages accounted for the largest amount of Accord’s first-time buyer applications in January,rising by 4% from January last year.

Merritt added: “Our data shows that first-time homeowners are making canny decisions about the type of home loan they choose, such as opting for longer terms, which reflects the sound advice brokers are likely giving to their clients.

“More and more first-time buyers are turning to a broker, perhaps because choosing a mortgage is one of the biggest challenges they will face in their adult lives.

“The growth in intermediary share of lending over the past five years, rising from 53% in 2012 to 77% in 2017, clearly demonstrates the value borrowers place on the role of a broker.”

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