Lending to FTBs increases by 5.2% year-on-year

Written by Oliver Wade
16/10/2018

There were 35,500 new first-time buyer (FTB) mortgages completed in August, approximately 2% more than the same month a year earlier, representing £6.1bn of new lending, a 5.2% increase year-on-year, according to the latest figures from UK Finance.

The firm’s latest Mortgage Trends Update for August 2018 revealed that the average FTB is 30 and has a gross household income of £42,000.

When analysing the figures for homemover mortgages, there were 38,000 completed in the month, which is actually a 2.3% decrease compared to August 2017. The £8.5bn of new lending in the month was the same year-on-year, with the average homemover being 39 and possessing a gross household income of £57,000.

In August there were 37,100 new homeowner remortgages completed, some 0.3% fewer than in the same month in 2017 and, similarly to homemover mortgages, the £6.5bn of remortgaging in the month was the same year-on-year.

New buy-to-let (B2L) home purchase mortgages dropped by 13% in August compared to last year, with 6,000 completed. By value this was £0.8bn of lending in the month, representing a drop of 20% year-on-year.

However, when looking at B2L remortgages, the volume increased by 4.5% in August when compared to the same month last year, with 13,800 completed. This accounted for £2.2bn of lending in the month, 4.8% more year-on-year.

Commenting on the data, UK Finance director of mortgages Jackie Bennett said: “Overall house purchase completions remain stable, driven largely by the number of first-time buyers which reached its highest monthly level since June 2017.

“B2L remortgaging saw relatively strong growth in August, due in part to the number of two year fixed deals coming to an end. This suggests that while new purchases in the buy-to-let market continue to be impacted by recent tax and regulatory changes, many existing landlords remain committed to the market.

“However, the homeowner remortgaging market has softened slightly, reflecting the many borrowers who had already locked into attractive deals in the months preceding the Bank of England’s base rate rise.”

Commenting specifically on B2L, Bricklane.com CEO Simon Heawood added: “Buy-to-let landlords have been hit by a number of reasons to sell up their properties in recent years, from increasing taxation to stronger protections for tenants. This means as many as 44% of landlords are considering selling their properties, despite many remaining attracted to the residential property market itself.

“The good news, however, is that there are now alternatives through which investors can access residential property returns, but in ways that are tax-efficient, diversified and good for tenants, without the drawbacks of direct buy-to-let.”

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Adam Cadle talks to Vida Homeloans director of sales - mortgages Louisa Sedgwick about the specialist first time buyer and buy to let markets

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