According to IMLA's report, this compares with just 53% a year earlier, as first-time buyers benefitted more than any other customer group from improving access to mortgage finance during 2017.
Recent data from UK Finance showed that first-time buyer numbers reached a ten-year high in 2017. IMLA says this was helped by nearly nine in ten (88%) applicants securing a mortgage offer in Q4 2017 for the third successive quarter, up from 73% a year earlier. More than four in five (84%) of those offers in Q4 2017 went on to complete, compared to 72% twelve months before.
Across 2017 as a whole, 87% of first-time buyer applications resulted in an offer and 81% of those went on to complete: both noticeable improvements on 2016. Overall, it meant that 71% of first-time buyer applicants achieved their aim of securing a mortgage in 2017, compared with just 50% in 2016.
Encouragingly, the picture for first-time buyers has improved without a noticeable change to the burden of mortgage repayments they are taking on. In December 2016, UK Finance data shows average first-time buyer mortgage repayments were equivalent to 17.4% of income. This remained largely stable throughout 2017 and actually fell to 17.1% of income in December 2017. The average loan-to-value also reduced slightly from 82.0% in December 2016 to 81.4% at the end of 2017.
For every 100 applications, an additional 21 first-time buyers completed on a mortgage in Q4 2017 compared with Q4 2016 (74 vs. 53). The next biggest improvement in terms of access to mortgage finance was among specialist borrowers, with the completion rate rising by 12 from 61 per 100 (Q4 2016) to 73 in the final quarter of 2017.
Kate Davies, Executive Director of IMLA, commented: “The mortgage market has proved itself to be resilient over the last year and intermediaries have continued to play a vital role in joining the dots between lender supply and consumer demand. In particular, first-time buyers have benefited from widely available and competitively priced deals, even before the extra confidence boost of the Stamp Duty exemption announced in the Autumn Budget.
It is encouraging to see that mortgage repayments have remained stable even as more first-time buyers make the step up onto the housing ladder. With the Bank of England base rate on a slow upward trajectory, lenders remain firmly focused on rigorous affordability tests so that borrowers do not overstretch themselves to achieve their ambitions.
At the same time, we need to be mindful that, as the latest English Housing Survey shows, more first-time buyers are opting for loans of 30 years or more. This represents a shift in the dynamics of owning a home compared with previous generations: a fact emphasised by recent warnings from the Institute for Fiscal Studies about the decline of homeownership among younger adults.
Mortgage lenders can play their part in supporting access for first-time buyers, and our figures show they are clearly doing so. Our improving success in satisfying the finance needs of first-time buyers throws the spotlight onto policy-makers to ensure that pressures on the availability and affordability of housing in the UK do not put young households off applying in the first place.”
