first-time buyer

First-time buyer levels at highest in over a decade

The number of first-time buyer mortgages have returned to pre-financial crisis levels, according to new analysis.

The Yorkshire Building Society’s (YBS) report estimates that 367,000 first-time buyers (FTB) secured a mortgage in 2018, up by 4,000 on the previous year. Encouragingly that makes it two years in a row where the amount of FTBs has stayed above the 2007 level of 359,000.

The following year saw the global financial crisis erupt, making an immediate impact on FTBs in the UK with a fall to 192,000 mortgages being taken out by new home owners. The return to pre-crisis levels of business has also seen FTBs account for half of all homes bought with a mortgage, the highest proportion since 1995.

What’s behind the figures?

The research by YBS seems to tally with other recent data on the FTB market. The HMRC recently released figures that indicated that most FTBs are reaping the benefits of changes to stamp duty thresholds. When an FTB purchases a house for less than £300,000, they pay no Stamp Duty Land Tax. When the house price is between £300,000 and £500,000, first-time buyers pay less than standard rates only on the amount over £300,000.

Other initiatives may be having an impact, such as the Help To Buy scheme which offers a government-backed loan of 20% in addition to the 5% buyer’s deposit when buying a new-build home. The scheme has been a success, and was recently extended until 2023 as part of the 2018 Budget.

Low mortgage rates to help savvy FTBs

There has been an upswing in mortgages being specifically targeted for first-time buyers, and mortgage rates are at a record low for this group of buyers. Furthermore, the currently subdued market could see savvy and confident FTBs make a move for a bargain.

“Getting on to the housing ladder is still not an easy step for many young people, as demonstrated by the increasing numbers who have received help from the bank of Mum and Dad,” said YBS Strategic Economist Nitesh Patel.

“Despite these challenges, the first-time buyer market has bounced back following the financial crisis to out-perform other sectors, such as the home-moving and buy-to-let markets. Buying your first home remains tough for many, but it’s encouraging to see first-time buyer levels at a 12-year high and climbing.”

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