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First time buyers owning their own home in larger numbers

The number of first time buyers increased by 30% in the last month with demand expected to continue with attractive mortgage deals.



More first time buyers are getting on the property ladder this year than in any month for a March period since 2007 according to a report from the Council of Mortgage Lenders (CML).

Mortgage loans increased 30% from 24,200 in February compared to 31,500 this month with the value of loans rising 29% from £3.8 billion last month to £4.9 billion.

The number of first time buyer loans were up 12% over the year from 28,100 in March 2016 and by value increasing 9% from £4.5 billion last year.

This may have been helped with the slowdown in new purchases for buy-to-let investors after increases in stamp duty tax and reduced taxation allowance on mortgage interest.

In terms of affordability for first time buyer the average mortgage is £133,500 in March with average household income at £40,000, income multiples at 3.53 and loan to value of 82.2% which means deposits are a healthy 17.8%.

Competitive mortgage deals

There are many competitive mortgage deals available to first time buyers according to Moneyfacts with 286 mortgages available at 95% loan to value (LTV), and another 630 at 90% LTV.

For first time buyers struggling to save there are deals requiring a 5% deposit mortgage although rates are higher with the average two-year fixed mortgage rate at 95% LTV at 4.20% and the five-year at 4.56%.

If you can afford a larger deposit of 10% there are better deals with a 90% LTV mortgage and average two-year fixed rate at this level is just 2.74%, says Moneyfacts.

Remortgage buyers have also benefited from competitive deals and the number of mortgage loans have increased 14% in the month from 31,100 to 35,500 and are 24% higher over the year.

In terms of value this is higher by 13% in the month from £5.3 billion to £6 billion and are 22% higher over the year.

Paul Smee, director general of the CML said both first time buyer and remortgage buyers expected to maintain momentum in the light of the very attractive deals currently available.

Other homeowner mortgages higher

For home movers the number of loans advanced have increased 24% from 24,400 in February to 30,200 in March 2017 with the value increasing 19% from £5.2 billion to £6.2 billion.

Over a year the story is different with home movers reducing -28% from 41,900 in March 2016 and the value of loans reducing -33% from £9.3 billion.

Buy-to-let landlords have had a volatile period following the changes to stamp duty land tax in April last year where transactions were brought forward.

There is higher activity for older homeowners with equity release buyers accessing wealth in their property, using a lifetime mortgage for holidays or home improvements.

Loans last year in March 2016 for new purchases and remortgages were 45,200 and this has reduced 58% to only 18,800. By value this has reduced 60% from £7.1 billion to £2.8 billion in March 2017.

The relatively sluggish activity among home-movers stands in contrast to the growth in first time buyer and remortgage activity, but in aggregate the market is showing broadly the levels of activity expected, says Mr Smee.

For older homeowners typically aged 65 and over there is higher activity with equity release buyers accessing wealth in their property to help maintain their standard of living.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to maintain your lifestyle or gift to a child or grandchild the deposit on their first home.

Start with a free mortgage quote or call us and we can take your details.  Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.


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