First-time buyers flood the market while more homeowners stay put

Aspiring homeowners are making the most of the recent first-time buyer focus from the government, but the second-stepper market has slowed as people hang onto their homes for longer.

Successful first-time buyer mortgage applications – those that have resulted in completion – soared in the first quarter of this year, with a 76% success rate compared to just 48% two years ago, according to the latest figures from the Intermediary Mortgage Lenders Association (IMLA).

Meanwhile, 90% of first-time buyer applicants secured a mortgage offer, which was up from 70% in the first quarter of 2016, with applications from first-timers rising as more individuals try to get onto the housing ladder to take advantage of the stamp duty relief and Help To Buy schemes available to them.

Getting onto the ladder could be easier than moving

However, for those who already own a home, the mortgage lending market has slowed down considerably according to the IMLA, with a 42% fall in the number of people moving house with mortgages since 2007. Interestingly, while the average homeowner moved house once every 7.4 years back in 1988, people now stay put for an average of 19.2 years.

This change could be down to a number of factors, one of which is likely to be linked to rising house prices, which make moving more difficult but can also benefit homeowners who can the equity they have gained through the capital appreciation of their home towards retirement.

Since the last quarter of 2017, the number of successful mortgage applications which have led to completion from homemovers has fallen by an average of 3% from 77% down to 74%.

Serving the whole market

Kate Davies, executive director of IMLA, said: “First-time buyers’ struggles have been highly publicised, with affordability stretched by house price inflation and modest income growth. Yet rising levels of mortgage enquiries, applications and completions shows that first-time buyers remain interested, able and willing to get a foot on the property ladder, with this customer group performing better than any other in the mortgage market, both in the short-term and on an annual basis.”

She added that while the government’s focus on increasing homeownership has resulted in a greater number of new homes being built, as well as more affordable housing, the initiatives haven’t done enough for movers, or “steppers” who continue to struggle with high house prices compared to wages, stricter lending criteria and a lack of available, appropriate homes.

“The government should take this pivotal juncture as an opportunity to reassess where in the market injections of new homes are needed: working with developers, planners and lenders to ensure the whole market is well-served,” Davies concluded.

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