FTB numbers continue to rise despite uncertainty

In February 2019, there were 24,880 new first-time buyer (FTB) mortgages completed, 4.1% more when compared to February last year, highlighting that FTBs continue to take advantage of low interest rates amid political and economic uncertainty, data from UK Finance revealed.

However, when assessing the number of homemover mortgage completions, the figure remained flat at 23,660, illustrating year-on-year growth of just 0.1%. While homemover levels remained stable, February’s statistics highlighted the fifth consecutive month of year-on-year growth for FTBs.

Despite homemovers remaining relatively inactive in February 2019, there were 18,200 new remortgages with additional borrowing in the month, 10% more than in February 2018. For these remortgages, the average additional money taken out in February was £52,000. In addition to this, there were 18,360 pound-for-pound remortgages, with no additional borrowing, 7.8% more than in the same period last year.

The figures found that the average loan to value ratio in the remortgaging market was 57% while the aver loan-to-income ratio was 2.74. This level is considerably lower than mortgages for house purchases which showed an average loan to value ratio of 72% and a loan-to-income ratio of 3.37.

Furthermore, there were 4,800 new buy-to-let home purchase mortgages completed in February 2019, 7.7% fewer than in the same month in 2018. There were 14,400 remortgages in the buy-to-let sector, 2.1% more than in the same period last year.

While buy-to-let house purchases continue to contract due to tax and regulatory changes, buy-to-let remortgaging has increased as borrowers move from fixed rate mortages and lock into new attractive rates.

Commenting on the figures, TMA director of mortgage services David Copland said: “Whilst activity from first-time buyers continues its upward trajectory, the buy-to-let market could do with further attention. As previous tax and regulatory changes continue to loom over the private rental sector, advisers will prove essential in guiding these customers towards the best solutions to fit their individual needs.

“At TMA our core focus is supporting these advisers, providing them with the quality lending solutions needed to maintain consumer confidence in the market. With this, customers can rest assured that suitable products are within arm’s reach – particularly for landlords and homeowners looking to remortgage.”

more 2 life CEO David Harris added: “The growing number of first-time buyers in the market can in part be attributed to parents passing on wealth to their children to help with home purchases. With wages still failing to keep up with inflation, the pockets of most first-time buyers aren’t proving deep enough to provide the often hefty mortgage deposits they need to take a first step on the property ladder – but thankfully, this is where parents and grandparents are stepping in to help.

“According to last autumn’s Equity Release Council report, 1.1 million properties in England were purchased with the support of a gift or a loan from family or friends between 2017 and 2018. As a greater number of consumers become aware of equity release, it’s likely we will see more people ‘gifting’ their wealth to their younger relatives in this way. It’s therefore vital for advisers to make the benefits of equity release clear in their conversations with consumers – not only so that they understand what equity release can do for them, but also so they can see the opportunities it can bring for their families.”

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