First time buyers have been the driving force behind the housing market and this is shifting to home movers due to the Coronavirus pandemic.

For the past decade first time buyers have dominated sales in the housing market and according to Zoopla this is shifting as home mover demand during 2021 will be stronger.

As the housing market opened up first time buyer demand spiked until lenders withdrew products and increased loan to values for mortgages due to uncertainty over the economy and demand reduced to pre-Covid-19 levels.

The Coronavirus pandemic has forced homeowners to re-evaluate their priorities for space, location and commuting as working from home becomes more important.

Demand shifting to home movers

There were more first time buyers than any other consumer type from 2019 with plentiful access to 95% loan to value (LTVs) mortgages, low interest rates and the government’s Help to Buy scheme.

Demand from first time buyers is weakening due to lenders making it harder to borrow with mortgages capped at 90% LTVs and higher interests starting at 3.24% for a two-year fixed rate.

Home movers were slow to react as the housing market opened up, however, pent-up demand is now 37% higher than pre-Covid-19 levels and 53% higher than this time a year ago.

Out of all the homeowners, 75% are over age 45 and equity rich with a generous choice of low interest mortgages available of 60 LTVs from 1.24% for a two-year fixed rate.

Zoopla expects the shift in sales from first time buyers to home movers to take time to unfold and remain similar to 2019 although this will change with homeowners dominating during 2021.

There may be fewer family homes on the market as the equity release buyer can avoid downsizing with agreeing a lifetime mortgage to access money to improve your quality of life or add a conservatory extension.

Homeowners may not move as equity rich remortgage buyers chose to raise capital and use this to improve the home by increasing space such as a loft conversion or extension.

Regional differences affecting demand

High LTVs of 90% and above are most accessible for markets where house prices are average or below average as loan to income ratios can accept a higher number of potential buyers.

This means first time buyers in regions outside southern England are expected to be most impacted by the current measures taken by lenders.

In regions such as London first time buyer deposits are 23.5% and therefore less affected by the withdrawal of high LTV mortgages.

For buy-to-let investors there could be opportunities to purchase in northern England as they can place larger deposits and lenders only require rental income to meet their mortgage interest rate requirements.

Demand from first time buyers has been slowest in London increasing by only 1.8% followed by Yorkshire and Humber up 4.8% and north west England up 9.7%.

Some regions have seen strong rise in home mover demand with Scotland up 83.5%, the east of England rising 66.2% and the South East up 65.8%.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

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

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise.