This morning's figures from UK Finance have revealed that confidence among prospective homeowners remains strong as first-time buyer and remortgage lending saw a rise during May, with buy-to-let lending holding steady.
According to the data, there were 30,720 new first-time buyer mortgages completed in May, 0.5% more than in the same month in 2018. Remortgages with additional borrowing saw annual growth of 19.8% and the average additional amount borrowed in May was £52,000.
Additionally, pound-for-pound remortgaging was 19.7% higher than in May 2018. Homemover mortgages dipped by 1.2% compared to May 2018 and buy-to-let purchase mortgages totalled 5,500, the same number as this time last year.
There were 29,430 homemover mortgages completed in May 2019, 1.2% less than in the same month a year earlier.
Stuart Wilson, corporate marketing dDirector at more 2 life, added: “Today’s statistics from UK Finance show that confidence amongst first-time buyers remains high despite some other areas of the market being more subdued. Help-to-Buy, along with other government initiatives, have gone a long way to help this pool of homeowners fulfil their borrowing needs – but some need to look further afield for financial support to afford their first home. While prices have dipped slightly, the average UK house price (£308,692) remains high in comparison to average salaries and finding enough to put down a 25% deposit (£77,173) without help is out of reach for most people.
Consequently, the Bank of Mum and Dad remains strong as parents and grandparents continue to support these borrowers’ by stepping in with a ‘gift’ to assisting them onto the property ladder by sharing their property wealth. According to last Autumn’s report from the Equity Release Council, 1.1 million properties in England were purchased with the support of a gift or a loan from family or friends between 2017 and 2018. As more older homeowners realise the full potential of equity release and the benefits it can bring not only to their lives, but also to their families, advisers will have a crucial role to play in helping to guide these individuals to the right solution for them.”
Shaun Church, Director at Private Finance comments: “Improving not moving seems to be the current mentality across the UK’s property market, as remortgages with additional borrowing have soared by 20% in the space of a year. Homeowners are turning away from upsizing, taking out additional loans against their existing property to fund improvements that will make their home suitable for the years to come, saving thousands of pounds in stamp duty in the process.
Stamp duty is paralysing the UK property market, meaning UK housing stock continues to be in short supply. In order to galvanise the property market, we call on the UK government to give serious consideration to the current property tax system. Minimising stamp duty liabilities will incentivise more people to move, freeing up housing stock and sparking a chain reaction of property transactions. Reigniting the market could in turn lead to a resurgence in stamp duty receipts for the government, making this a win win solution for homeowners and the treasury.”
Louisa Sedgwick, director of mortgage sales at Vida Homeloans, commented: “First-time buyers remain an important part of the mortgage market, they made up the biggest part of the property market in 2018 for the first time in 23 years. It is no surprise that they are a sector of the industry that mortgage lenders are keen to attract, with the amount of completed first time buyer mortgages rising year on year.
With the average age of a first time buyer now 32, the industry must continue to support those facing an uphill climb when it comes to buying a home. By providing affordable and sustainable rates, offering innovative, out the box thinking and diversifying product choices, lenders will continue to do their part in driving the UK FTB mortgage market forward.”
Tomer Aboody, director of property lender MT Finance, says: "It is always a positive to see more first-time buyers in the market, in spite of the difficulties in borrowing from the banks, with lending at only 2.78 times income. This is likely to be based on a few factors, but most of all improved sentiment regarding a possible market upturn. There is a growing feeling among buyers that the time is right to make a move, either because property prices and volumes will increase once a new prime minister is installed with positive plans regarding stamp duty reform, but also the fear that at some point in the next year the Bank of England may feel the need to hike Base Rate.
We aren’t seeing a flood of buy-to-let investors selling up as a consequence of the extra taxes that have hit them. Investors are absorbing the extra costs and refinancing, hoping that in the long term values will go up. This once again proves that higher stamp duty and extra taxes haven’t helped create more movement in the housing market, but have done the complete opposite and created stagnation instead."
Kevin Roberts, Director, Legal & General Mortgage Club, comments: “A competitive mortgage market and slower house price growth are helping more first-time buyers make homeownership a reality. However according to HSBC, with people now expecting to be on average 39 years old before they buy their first home, there are clearly still challenges facing people trying to take their first step, particularly if they don’t have the support of a Bank of Mum and Dad.
Saving a deposit remains a big barrier for younger buyers, but there are options. Speaking to a mortgage adviser could be a great starting point for these individuals. Through their extensive knowledge and view across the market, these professionals will be able to show borrowers some of the great routes to get onto the housing ladder, such as guarantor mortgages and Government schemes like Shared Ownership, which could make the difference when it comes to getting the keys to their first home.”