First-time buyers undeterred by current uncertainty

Political and economic uncertainty has failed to dent first-time buyers’ enthusiasm, latest UK Finance figures show, with numbers reaching a 12-year high in 2018.

According to the trade body’s Mortgage Trends Update, 370,000 new first-time buyer mortgages completed last year, up 1.9% compared to 2017 and the highest number since 2006. The £62 billion of new lending in 2018 was up 4.9% compared to the year before.

In December alone, 30,900 new first-time buyer mortgages completed, an increase of 1.6% compared to the same month a year earlier.

First-time buyers are often helped onto the property ladder by government schemes such as Help to Buy. Many also receive financial help from the Bank of Mum and Dad, either in the form of contributions towards their deposits, or through mortgages which enable buyers to purchase a property without a deposit, provided parents keep a percentage of the property price in a savings account.

Home mover and buy-to-let numbers slow

Although first-time buyer mortgage numbers were up last year, 2018 saw a slight drop in the number of home mover and buy-to-let mortgages, with some landlords appetite reducing due to recent tax and regulatory changes. These changes include a gradual reduction in the amount of mortgage interest rate relief landlords can claim, and a 3% stamp duty surcharge on second homes.

There were 5,100 new buy-to-let home purchase mortgages completed in December 2018, down 5.6% compared to the same month a year earlier. In 2018, there were 66,400 new buy-to-let mortgages completed, 11.7% less than in 2017.

However, both homeowner and buy-to-let remortgage numbers were up in 2018, with many property owners rushing to lock into competitive fixed rate deals ahead of any potential interest rate rises. Last year saw 169,100 new buy-to-let remortgages complete, 11.2% more than in 2017, whilst 476,900 new homeowner remortgages completed, up 10.8% compared to the previous year.

Jackie Bennett, Director of Mortgages at UK Finance said: “Homeowner remortgaging 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.”