The number of new first time buyers entering the market reached the highest level (365,000) since 2006 in 2017, according to the latest mortgage trends update from UK Finance.
However, mortgage lending to first time buyers, home movers and buy-to-let landlords dropped in December last year compared to the previous year.
There were 30,800 new first time buyer mortgages completed in December – 5.2% fewer than in the same month a year earlier. The £5.1 billion of new lending in the month was 1.9% down on an annual basis. The average first time buyer is now 30-years-old and has an income of £41,000.
2017 overall saw 365,000 first time buyers – the highest number since 2006. This is an annual increase of 7.4%, from 340,000 in 2016.
There were 30,700 new home mover mortgages completed in December – 4.7% fewer than in the same month of 2016. The £6.5 billion of new lending in the month was down by 3% year-on-year. The average home mover is 39-years-old and has an income of £55,000.
There were 30,500 new homeowner remortgages in the month of December – 7.4% more than in the same month of the previous year. The £5.2 billion of remortgaging was 8.3% more on an annual basis.
Number of First Time Buyers Reached Decade High in 2017
In the buy-to-let sector, there were 5,300 new property purchase mortgages completed in December – down by 17.2% on the same month a year earlier. By value, this was £0.8 billion of lending – 11.1% down year-on-year.
9,900 new buy-to-let remortgages were completed in December – 11.6% fewer than in the same month of the previous year. By value, this was £1.6 billion of lending – down by 11.1% on an annual basis.
Paul Smee, the Head of Mortgages at UK Finance, comments: “2017 saw the number of first time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder.
“But, although the market remains competitive, there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year.”
He adds: “We are also seeing a less buoyant buy-to-let market, which continues to be impacted by recent tax and regulatory changes. This will continue to flatten gross lending volumes this year.”
Shaun Church, the Director of mortgage broker Private Finance, also responds to the figures: “First time buyer numbers hit an 11-year high in 2017, thanks to a combination of affordable mortgage rates and a sustained effort from Government to help new buyers. Lenders keen to get a slice of the first time buyer action have been consciously improving their product range to target this group, with features such as allowing multiple borrowers to take out a loan becoming more commonplace. The recent change to Stamp Duty is likely to lead to heightened competition, with first time buyers set to benefit from an even greater product range as a result.
“The remortgage market also performed well last year, with existing homeowners motivated by rock bottom rates to lock into new deals. However, other areas of the market – such as the upper end of the housing market and the buy-to-let sector – continue to suffer from tax and regulatory changes, resulting in a flatter overall outlook for mortgage lending.”
He continues: “Affordability issues also stubbornly remain. Annual house price growth hovered around 5% in 2017 – an improvement from the significant annual gains seen in 2016, but sufficient to cause concern for some would-be buyers. Large regional variances also remain and, despite house prices slowing in some London boroughs, the affordability gap between the capital and the rest of the country remains vast. However, the industry remains hopeful that the Government’s promise of greater housebuilding and therefore improved affordability will start to be realised in 2018.”
The CEO of the National Association of Commercial Finance Brokers, Graham Toy, adds: “The highest number of first time buyers in more than a decade is excellent news, as it shows generation rent’s wait-and-see mentality is gradually becoming a thing of the past. Clearly, mortgages are available to those who are young enough, can command good salaries and want a place of their own.
“Elsewhere, the buy-to-let market is now showing more modest signs of growth, due to recent tax changes, as landlords’ appetite to add to their portfolio using finance is lower. We saw this in the 17.2% fewer new buy-to-let mortgages completed in December than in the same month a year earlier. While we have to take the seasonal slowdown into account, the signs point to all mortgage lending in 2018 being somewhat subdued.”
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