Number of first-time buyers reaches 12-year high amid uncertainty

There were 370,000 new first-time buyer mortgages completed in 2018, a figure that is 1.9% higher than that reported in 2017, and the highest reported number of first-time buyer mortgages since 2006 when there were 402,800, new data revealed.

The figures published by UK Finance in its Mortgage Trends Update for December 2018 found that the £62bn of new lending in the year was 4.9% more than in 2017.

In December 2018, there were 30,900 new first-time buyer mortgages completed, approximately 1.6% more than in the same month a year earlier. By value, the £5.2bn of new lending in the month was 4% more year-on-year.

However, the number of new homemover mortgages completed in December actually dropped, falling by 1.3% when compared to the same month in 2017. Despite falling in volume, the £6.5bn of new lending in the month was the same year-on-year. In 2018 overall, there were 367,800 new homemover mortgages completed, some 1.9% less than in 2017. Though, again, the £80bn of new lending remained the same year-on-year.

It seems as though homeowners continued to take advantage of the low-interest environment in December, with the number of new homeowner remortgages increasing by 9.3% more than in December 2017, rising to 34,000. By value this percentage highlighted even further growth, as the £6.1bn of new lending in the month was 13% more year-on-year.

This trend continued when looking at the figure as a whole for 2018, as there were 10.8% more new homeowner remortgages completed in 2018 than in 2017, at 476,900. Similarly to what was seen when looking at remortgaging levels on a monthly basis, in the year, the £85bn of new lending was 13% more than in 2017.

The number of new buy-to-let mortgages completed continued to decline in December 2018, falling by 5.6% when compared to December 2017, closing the month at 5,100. By value, this was 0.7bn of lending in the month, representing a 12.5% decline year-on-year. In 2018, there were 66,400 new buy-to-let home purchases completed, some 11.5% less than in 2017. The £9bn of new lending in the year was 15% less than in 2017.

Despite the number of new buy-to-let mortgages falling, the number of new buy-to-let remortgages rocketed to 12,400 in December, some 25.3% more than in the same month a year earlier, with the value also increasing by 25% to £2bn. In the year, there were 169,100 new buy-to-let remortgages completed, 11.2% more than in 2017, while the £27bn of new lending in the year was 11.6% higher than in the previous year.

Commenting on the data, UK Finance director of mortgages Jackie Bennett said: “The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in twelve years, as competitive deals and government schemes such as Help to Buy continue to boost the market.

"Homeowner remortgaging also 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.”

Phoebus Software sales and marketing director Richard Pike added: “There are some positive figures in today’s UK Finance release. 2018 had its highs and lows, but it’s no surprise that the biggest winners were first-time-buyers. Help-to-buy has undoubtedly been the catalyst for this increase, and will surely continue to help more first-time-buyers this year.

“With inflation now below the government target and GDP falling there are a few clouds surrounding our economy. If interest rates remain at their current level, and looking at recent form, it is reasonable to predict that equity release will remain strong in 2019 as an alternative to downsizing, but also as a way for the bank of mum and dad to help their offspring onto the property ladder.”

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