Number of First Time Buyers Hits 12-Year High

The number of first time buyers getting onto the housing ladder hit the highest level in 12 years in 2018, according to the latest Mortgage Trends report from UK Finance.

During 2018, 370,000 new first time buyer mortgages completed, which is 1.9% more than in the previous year. This is the highest number of first time buyer mortgages since 2006, when 402,800 completed. The £62 billion of new lending in 2018 was up by 4.9% on 2017.

In December last year, 30,900 new first time buyer mortgages completed – up by 1.6% on the same month of the previous year. This £5.2 billion of new lending was 4% higher on an annual basis.

30,000 new home mover mortgages were completed in December, which has dropped by 1.3% year-on-year. The £6.5 billion of new lending was unchanged. In 2018 in total, 367,800 new home mover mortgages completed – 1.9% fewer than in 2017. This £80 billion of new lending was also the same as in the previous year.

In December, 34,000 new homeowner remortgages completed, which is up by 9.3% on the same month of 2017. The £6.1 billion of remortgaging was 13% more on an annual basis. 476,900 new homeowner remortgages completed in 2018, some 10.8% more than in the previous year. This £85 billion of new lending was up by 13% on 2017.

5,100 new buy-to-let home purchase mortgages were completed in December, which has fallen by 5.6% on the same month of the previous year. By value, this £0.7 billion of lending dropped by 12.5% year-on-year. In 2018, 66,400 new buy-to-let home purchases completed – down by 11.5% on 2017. The £9 billion of new lending was 15% less annually.

During December, 12,400 new buy-to-let remortgages completed, which is up by 25.3% on the same month of the previous year. This £2 billion of lending was up by 25% yearly. In 2018, 169,100 new buy-to-let remortgages were completed – 11.2% more than in 2017. By value, this £27 billion was up by 11.6% year-on-year.

Comments

Jackie Bennett, the Director of Mortgages at UK Finance, says: “The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and Government schemes such as Help to Buy continue to boost the market.

“Homeowner remortgaging also saw strong growth, driven by customers locking into attractive rates, a trend we expect to continue in 2019, as more fixed rate mortgages come to an end.

“Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.”

Matt Andrews, the Managing Director of Mortgages at Masthaven Bank, also comments: “Despite the looming Brexit deadline, today’s figures show that first time buyers aren’t put off as the property sector increasingly becomes a buyers’ market. Thanks to a combination of Stamp Duty reliefand Government initiatives such as Help to Buy, the future is looking particularly bright for this segment of buyers. Remortgaging figures are likely to remain steady, with little threat of impending rate rises – at least for the time being, anyway.

“It is interesting to note the continued downturn of buy-to-let activity across the market. From tax alterations to regulatory updates, it seems the sector is really feeling the effects of these changes. In order to keep the market attractive to buy-to-let investors and to avoid further market uncertainty, greater incentives and lending products will be paramount.”

Shaun Church, the Director of mortgage broker Private Finance, reacts to the findings: “The first time buyer market is booming as the UK finally welcomes a new generation of homeowners. While the rest of the UK property market suffers from sluggishness, those who had dismissed the notion of homeownership as a property pipedream are suddenly finding themselves in a position to buy, as a result of more favourable economic and market conditions.

“The upfront cost of purchasing a property has been gradually eased by falling house price growth and Government initiatives such as Help to Buy and Stamp Duty exemption. Lenders are also giving first time buyers a considerable helping hand through the relaxation of lending criteria, a surge in products at higher loan-to-values and near record low mortgage rates, making mortgages both more attainable and affordable.

“It’s tempting to be swayed by headline rates and cashback deals in this ultra-competitive market, but before rushing into a mortgage, we would urge first time buyers to shop around. It’s vital to understand the total cost of a mortgage over the full-term, when all fees and costs are taken into account. This ensures borrowers secure the most competitive deal that will suit them both for today but also in the long-run. Using an independent mortgage broker is the best way of getting the full picture of the products currently on the market.”