First-time buyers are strongest part of the market

Michael Lloyd

December 8, 2017

First-time buyers have been the strongest part of the market, lending £50.5 billion in 2016, which is  over 10% higher than in 2007 (£45.3 billion), figures from the FCA data bulletin show.

After a sharp fall in 2008, first-time buyer lending grew again over the period, particularly from 2011 onwards. In 2016 the number of new loans (312,500) was 69% up from 2008 (184,500) and just 7% below the level seen in 2007 (335,800).

The total value of first-time buyer lending also increased notably from 2011 onwards and in 2016 (£50.5 billion) was over 10% higher than in 2007 (£45.3 billion).

All UK regions saw growth in transactions volumes from 2012 to 2014 but with variations in different regions. After a strong recovery up to 2014, Greater London has since seen declining volumes of mortgage transactions.

Apart for the South East, which is showing signs of plateauing, the other parts of UK have continued the upward trend in 2016 following a slight dip in 2015. Northern Ireland has seen the largest percentage increase in volumes over the period, with 2016 up 43% on 2007. South West and East Midlands also show higher loan levels in 2016 compared to 2007.

First-time buyers are borrowing more and placing larger deposits with the average first-time buyer loan increasing in value by 20% from £135,000 in 2007 to £161,600 in 2016.

Greater London had the largest increase in loan value over the 10 year period, rising by 39% from £208,300 to £289,000.

The average first-time buyer deposit across the UK was £50,000 in 2016 compared to £36,000 in 2007. In Greater London the average deposit was £126,000 while the average property value was £437,000, however, the lowest average deposits were in Wales, North East and Northern Ireland at just £27,000.

There has been a huge decrease in first-time buyers aged 25 and under. In 2007 this age group accounted for 30% of first-time buyers but by 2016 this had reduced to 22%. The average age of first-time buyers has increased slightly, rising from 30 to 31 between 2007 and 2016.

The government has introduced measures to help first-time buyers such as the mortgage guarantee scheme where borrowers get a mortgage with a 5% deposit and the government takes on some of the risk of default.

In 2016 22,900 UK first-time buyers used the mortgage guarantee scheme in 2016 which is around 7% of the total.

With shared ownership schemes the borrower initially purchases only a part share of the property and rents the remainder. In 2016 there were around 14,500 shared ownership first-time buyer loans, accounting for 5%.

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