Number of new homebuyers entering the market recovers to pre-recession levels for the first time

Posted on Tuesday, February 19, 2019

The number of new homebuyers entering the market has recovered to pre-recession levels for the first time, official figures have revealed.

There were 370,000 new first-time buyer mortgages completed in 2018, some 1.9 per cent more than in 2017, according to data released today from trade body UK Finance.

This is the highest number of first-time buyer mortgages since 2006, when the figure stood at 402,800.

Banks lent a total of £62billion in first-time buyer mortgages over the course of the year, a 4.9 per cent increase on the amount lent the year before.   

The high volume of new buyers entering the market has been attributed to a combination of low rates on high loan-to-value mortgages, government schemes such as Help to Buy, family-link style mortgages which enable homeseekers to buy with no deposit, stamp duty exemption, and fewer landlords renting out properties.

Richard Campo, managing director of Rose Capital Partners, said: 'Lenders have been making it easy for first-time buyers over the last couple of months, with several providers announcing reduced rates on high loan-to-value mortgages.

'There are currently over 17,000 products available for first-time buyers.'

The number of deals available to first-time buyers without large deposits has been steadily increasing. 

Research from consumer ratings firm Defaqto recently revealed that there are now 46 per cent more 95 per cent loan-to-value deals than there were a year ago. 

And these high loan-to-value deals have also steadily been getting cheaper.  

The average two-year fixed rate at the maximum 95 per cent loan-to-value has fallen by 0.54 per cent since the base rate last moved in August.

Since the start of the year, several big brands including Barclays, HSBC, Lloyds Bank, NatWest and Santander have all cut rates across their high-LTV two and five-year fixed deals.

The result of this increased competition at the high LTV end of the market has been more choice and cheaper rates for first-time buyers. 

On top of this, lenders are trying to lure in new buyers with innovative 'no-deposit' mortgages.

Sometimes described as 100 per cent loan-to-value mortgages, in reality these deals do require a deposit of some sort, and usually require a close family member to help out.

Last month Lloyds Bank launched a dealthat lends first-time buyers 100 per cent of the property purchase price so long as a family member agrees to deposit savings equivalent to a minimum of 10 per cent of this loan into a fixed-rate savings account with the bank.

And Lloyds are far from the only lender which has entered this space in recent years. 

Barclays offers a very similar deal known as the family springboard mortgage and Nationwide will allow parents to borrow extra on their mortgage to gift to children as a deposit.

Aldermore Bank, Harpenden Building Society and Family Building Society also offer versions of a family mortgage, many of which require family members to use their own homes as security in place of depositing savings with the lender.  

Via @ThisIsMoney