First-time buyers returning
Research conducted by Mortgages Direct, the financial subsidiary of Spicerhaart, revealed FTB levels in the market reached 46 per cent for February, increasing from 45 per cent in January.
The number of buyers opting for interest-only mortgages reached its highest level since the research began in April 2005. It revealed 32 per cent of buyers opted for interest-only mortgages in February – a 7 per cent increase from the January figure of 32 per cent. This is a factor that Peter Gladdy, director of Mortgages Direct, admitted his concerns about. He said: “The high level of first-time buyers indicates that confidence has returned after a short period of wild speculation that a housing market crash is imminent. However, after a decade of strong house price growth and interest rates rising in the last two years, buyers are struggling not only to afford to buy a home but also repay their mortgages. As a result more borrowers are opting for interest-only mortgages instead. However, this trend is worrying and not advisable unless a comprehensive repayment method is in place.”
The report also revealed fixed rates remained the most popular mortgage option for the majority of borrowers in February, accounting for 64 per cent of sales in the past year, compared to 45 per cent the year before.
Peter O’Donovan, mortgage manager at Bestinvest, said FTB enquiries had grown, as had general interest in purchases. He said: “We have had a lot more enquiries about purchases in general this year. The market seems to be buoyant at the moment. Last year a lot of our business was remortgages, but this year, purchases are on the up.”