The latest data and analysis from UK Finance has revealed that mortgage lending for first-time buyers, home movers and remortgagors all saw an increase during February when compared to the previous year.
Total homeowner purchases, which combine both home movers and first-time buyers, reached 50,000, the highest level for February since 2007.
This morning's figures show that there were 25,200 first-time buyer mortgages completed in February 2018, some 2.4% more than in the same month a year earlier. The £4bn of new lending in the month was 2.6 per cent more year-on-year. The average first-time buyer is 30 with a gross household income of £41,000.
There were 24,800 home mover mortgages completed in the month, the same as in February a year earlier. The £5.3bn of new lending in the month was 1.9% more year-on-year. According to the data, the average home mover is 39 and has a gross household income of £55,000.
UK Finance found that there were 35,400 homeowner remortgages completed in the month, some 11.3% more than in the same month a year earlier. The £6bn of remortgaging in the month was 11.1% more year-on-year and 5,200 buy-to-let home purchase mortgages completed in the month, some 8.8% fewer than in the same month a year earlier. By value this was £0.7bn of lending in the month, 12.5% down year-on-year.
There were 14,100 buy-to-let remortgages completed in the month, some 20.5% more than in the same month a year earlier. By value this was £2.2bn of lending in the month, 15.8%more year-on-year.
Jackie Bennett, Director of Mortgages at UK Finance, commented: “Homebuyers have shaken off the winter blues, with purchases by first-time buyers and home movers reaching their highest levels for February in over a decade. Remortgages are also up year-on-year, as homeowners look to fix costs amid anticipation of further interest rate rises.
Meanwhile the buy-to-let market continues to operate at stable but subdued levels, due in part to the impact of recent legislative and tax changes."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "These numbers are encouraging because they underline the fact that you write off this market at your peril.
Buyers and sellers are showing, once again, that those prepared to negotiate hard are still getting on with their lives, albeit at slightly softer price levels. Encouragingly, first-time buyers are taking advantage of the abolition of stamp duty announced at the end of 2017, as well as a more level playing field with buy-to-let investors, with the latter's numbers noticeably shrinking as revealed in this report.
Although it is sometimes tough for first-time buyers, many are showing that they would prefer to buy rather than rent, although clearly many have no option unless they have help from the Bank of Mum and Dad.
Looking forward, we expect more of the same - no boom or bust but a steady market with realistic pricing."
John Phillips, Just Mortgages and Spicerhaart group operations director, had this to say: “UK Finance figures out today reveal that homeowner house purchases reached 50,000 in February 2018, which is the highest level in more than a decade, and more than half of these were first time buyers.
This is great news for the mortgage market. The first time buyer sector has been buoyant for a while now, with 2017 seeing the highest level of first time buyers since 2006, and now we can see that this was not a blip, but a trend that is continuing into 2018. The various incentives out there at the moment – help to buy and the stamp duty freeze and a number of new housing projects announced over the past few months – are starting to have the desired effect and the first time buyer market is really driving the sector at the moment.
We can also see that remortgaging is up hugely, which also shows that people who were perhaps holding back before are starting to lock in new deals while rates are still low.”
Mike Scott, chief property analyst at Yopa, says: "The mortgage lending figures published today are good news for the UK housing market. The number of first-time buyers has increased compared with last year, and with the busiest February for new house purchases in a decade, there’s no sign that the current slowdown in the London market is spreading to the rest of the country. There have been recent concerns about a fall in the number of house purchases this year, but these figures down’t give us any evidence for that.
With mortgage and house-buying activity at this level, Yopa expects that house prices will continue to rise slowly in all areas of the country except London. There’s little risk of a sustained downturn in prices as long as lenders keep lending, but equally there’s no chance of another house price boom while prices are already so high compared to average earnings.
It’s still a tough market for home buyers, especially first-time buyers. The average first-time buyer household now needs an income of £41,000, around 50% higher than average individual full-time earnings, and also has to put down a deposit of over £25,000, meaning that most first-time buyers will need two incomes in their household and access to a substantial sum of money."
James Cameron, director of property management company Vesper Homes, says: "On the one hand, UK landlords have slowed down on making new purchases or stopped buying properties for investment purposes altogether. But in the main, they are keeping their current portfolios intact as opposed to selling up and risking not getting the price they want.
On the other hand there is still a pool of investors who are cash rich but looking at property investment opportunities over the next five years - particularly those with higher yields and low entry prices. The Chinese are still our main source on investment for these sorts of purchases, followed by the Kuwaitis.
Remortgaging figures are strong for landlords as they try to maximise the earning potential of their investments, with many landlords taking this opportunity to raise money. But we are finding that our UK-based clients are doing this in order to fund their own personal purchases - such as a buying a bigger home for their own family to live in - rather than using the money to re-invest into their existing investments so they can make them generate as much money as possible in these trickier times."
Richard Pike, Phoebus Software sales and marketing director, says: “Given all the, so say, uncertainty in the British economy it appears that the ongoing low interest rate environment, and perhaps the potential threat of impending rate rises, continues to give people the impetus to buy, or remortgage. The fact that inflation fell back towards the government target in the last quarter, means there is perhaps less pressure to raise interest rates. With this in mind the overall sentiment is likely to remain stable and, as construction output for new housing is up, supply is also increasing. Generally the outlook for the coming months is positive.”