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First-time buyer mortgage applications hit six-month high in March – First Direct

The value of mortgage applications submitted by first-time buyers reached £8bn in March, the highest amount in six months, data from a bank has shown.

The First Direct first-time buyer trends report based on data from CACI revealed that the value of applications in March was also 42 per cent up on February’s £8bn.

However, despite the application value reaching its highest level since September last year, the first quarter of 2023 was down by 26 per cent compared to the same period in 2022. In March last year, the first-time buyer application value reached £10.8bn, marking a two year high.

Activity was more subdued in April as the value totalled £6.2bn, however, this was the second highest amount in six months.

The mortgage market as a whole, including homemovers and remortgagors, reached a value of £26.6bn in March. This was the first time the value of applications passed £20bn since September last year, and it was also £8.9bn up on February.

Carl Watchorn, head of mortgages at First Direct, said: “Typically, March and April tend to be some of the busiest months of the year when it comes to first-time buyer activity. March usually sees a sharp spike in applications after what is often a quiet start to the year.

“It’s really encouraging to see the market recovering during March and April to a level of applications not seen since September 2022. A closer look at this data also reveals that the value of first-time buyer loans has doubled since Q4 last year; a segment fundamental for a vibrant housing market.”

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The average first-time buyer loan was £211,766 in April, which was an 8.8 per cent increase or more than £17,000 rise since the start of the year.

First Direct said it was also the highest figure since July 2022 when the average loan amount reached £212,153.

Loan sizes among first-time buyers saw the biggest jump, but average homemover loans also rose by 14,200 since January while there was a £9,500 increase in average remortgage loans.

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Watchorn added: “The news that average first-time buyer loans are increasing is likely indicative of increased confidence in the sector, although it does once again highlight the challenge faced by many young people trying to bridge the gap between average income and the average house price.

“It’s also important to consider that the average first-time buyer house deposit is now more than £60,000. Faced with higher rates than we’ve seen in a number of years, many buyers will be looking to save up as big a deposit as possible in order to secure a cheaper rate against a lower loan to value (LTV) product.”

By Shekina Tuahene

Source: Mortgage Solutions

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There’s some brilliant news for first-time buyers

Finally, some good news for first-time buyers: accidental and hobby landlords are getting rid of their properties at record speeds. In UK cities, the housing market is now flooded with flats and small homes that landlords, many of whom have been only dabbling unseriously in the business for years, now want to shed as quickly as possible. According to the financial newspaper CityAM, the number of landlords looking to exit the market is at a 13-year high.

Why now? Twin pressures are pushing them to sell. First, the crisis in the mortgage market means many property owners are being shovelled onto a variable rate agreement, which means landlords may no longer make a return on a month-by-month basis. And second, perhaps more significantly, they fear a huge financial hit if they hold on and then decide to sell at a later date.

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The chancellor, Jeremy Hunt, announced last week a reduction in capital gains allowance, which reduces the amount of money an individual can make from the sale of assets before paying tax on their winnings. This will fall from £12,000 to £6,000 in April, and then again to just £3,000 in April 2024. Great news for the public purse; bad news for property speculators.

Flooding the market reduces demand and puts a cap on prices. In fact, Halifax reported this week that house prices are falling at their fastest rate for 14 years, after reaching a temporary, artificial high in the spring of this year. That price peak was caused by a lack of properties being put up for sale, leaving potential buyers fighting it out with each other and provoking bidding wars. Cash buyers were king. How could a first-timer compete with that?

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No longer. Now, if you’re lucky enough to have saved a deposit, here’s your chance. House prices are dropping. They will likely continue to drop for some time. For many people, the next two years could be the moment at which the housing market finally becomes accessible.

By Hannah Fearn

Source: Independent

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First-time homebuyers enjoy COVID deposit boost

Cuts in spending during the height of the COVID-19 pandemic have enabled many planning to buy their first home to save more for their deposits, new research from the Nottingham Building Society revealed.

The study found that one in five (19%) of those planning to buy a house for the first time in the next five years will have deposits saved this year.

It also showed that one in three (32%) will be viewing properties in 2022, while 8% of first-time buyers have already started house hunting.

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Citing results of the same survey, Iain Kirkpatrick, chief customer officer at Nottingham Building Society, said that COVID-19 restrictions placed on people had seen many dramatically cut back on the amount they spent – from eating out, to buying new clothes, and going on holidays.

Of those who were able to save for their first home, 60% have spent less on clothes, 56% have made sacrifices when it comes to eating out, and 51% cut spend on holidays.

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“Although it has been a very difficult time, for many of those saving for their first home, the reduction in their expenditure provided an opportunity to dramatically increase their deposit savings and move a step closer to owning their own home,” Kirkpatrick said.

The survey, commissioned by Nottingham Building Society, was conducted by consumer research company Consumer Intelligence, which interviewed 1,023 UK adults online from February 18 –21.

By Rommel Lontayao

Source: Mortgage Introducer

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First-time buyers happy to risk savings, study shows

New research commissioned by UK-based money app Ziglu has revealed that nearly half of prospective first-time buyers were willing to take more risks with their savings to afford a home sooner.

Almost half (48%) of those surveyed were “happy taking more risk” with some or all of their savings, and nearly one in 10 said they would be happy taking more risk with all their savings.

Part of the reason first-time buyers were happy to take more risk was they were unhappy with the available options for saving for a home, the same study showed. Around 56% felt there were not enough saving and investment options for first-time buyers.

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Despite current low rates, most revealed they were still relying on cash savings accounts, with 80% saving in cash accounts, 32% in cash ISAs, and 15% in lifetime ISAs; 9% were investing in shares and 8% were investing in cryptocurrencies.

First-time buyers also admitted to being increasingly worried about rising inflation and the cost-of-living squeeze with planned national insurance increases.

Around 85% worried their savings plans could be knocked off course, while 63% wanted the government to provide more help with saving for a home.

The number of first-time property buyers rose to nearly 410,000 last year with average deposits estimated at around £53,935, Ziglu reported.

Affordability was still being squeezed, however, as house prices cost around 6.9 times the earnings for would-be homeowners.

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Ziglu founder and CEO Mark Hipperson pointed out that the average age for a first-time buyer in the UK is around 32, a sure sign that saving for a deposit is a “major challenge” for first-time buyers.

“It makes sense that people are willing to take some risk with their savings and investments in order to raise the money faster and particularly so when rising inflation means people are getting a negative rate of return on cash savings,” Hipperson said.

“Cryptocurrency and investing in the stock market are increasingly playing a role in helping people save for deposits, although clearly the volatility in these markets means they cannot be the only ways people save,” he added.

Among savings and investment options first-time buyers would want, increased government support remained the most popular option, though a significant number of those surveyed also wanted to see more action from savings and investment providers.

Ziglu’s study found that first-time buyers who planned to buy in the next five years expected to have to save for four years on average. More than half were only using one method of saving, while 19% used three or more.

By Mary Or

Source: Mortgage Introducer

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UK’s most affordable first-time home buyer locations

The places first-time buyers can find the biggest bargain homes have been revealed in new analysis.

Research by estate and lettings agent, Barrows and Forrester, has revealed where in the UK people buying their first home can find the best value, based on the average price paid for a first home compared to the rest of the market.

What does that mean?

Across Britain, the average first home currently costs £220,460, having increased by 9.9% annually.

The average price paid by former owner occupiers (FOO) – a.k.a those funding the purchase of a new home with the sale of an existing home – is £309,462, having increased by 11.4% in the past 12 months.

This means, on average, first-time buyers in Britain benefit from a 28.8% price drop when compared to the rest of the market.

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Where can the biggest price drops be found?

Regionally speaking, nowhere in Britain do first-time buyers get a more affordable purchase price than in Scotland, where they pay an average of £144,829 versus the £218,673 paid by FOOs – a discount of 33.8%.

Following closely behind is the South East, where the average first-time buyer pays 32.9% less to get a foot on the ladder, while the South West (28.5%), West Midlands (28.5%), East of England (27.6%), North West (26.7%), North East (26.1%), East Midlands (26.1%) and Wales (25.9%) are also home to a discount of 25% or more.

Just Yorkshire and Humber (24.9%), and London (24.3%) are home to a first-time buyer prices of less than a 25% reduction.

Best local authority areas

Interestingly, when dissecting the market at local authority level, the top 10 best FTB discounts are largely dominated by two areas, poles apart geographically speaking – Surrey and Scotland.

The best first-time buyer discount is available in Elmbridge, Surrey, where first time buyers can expect to pay an average price of £450,621, 43.8% below the FOO average of £802,351.

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The second-highest first-time buyer discount is found in Woking, Surrey (40.7%); followed by Mole Valley, Surrey (39.1%); Surrey Heath (38.7%); Horsham, Sussex (38.6%); Stirling, Scotland (38.4%); Perth and Kinross, Scotland (38.4%); East Lothian, Scotland (38.3%); Clackmannanshire, Scotland (38.3%); and East Dunbartonshire, Scotland (38.1%).

The smallest first-time buyer price decreases tend to be found in London.

In fact, in the City of London, first-time buyers spend, on average, 4.3% more than FOO buyers, the only areas where it costs more for your first home.

In Newham, the price drop is just 5.4%; while Tower Hamlets (5.7%); Waltham Forest (10%); and Hackney (11.1%) round off the five local authorities that offer the smallest relative first-timer house price.

What’s the agent advice?

Managing director of Barrows and Forrester, James Forrester, said: “While a red-hot market has been heralded as a sign of economic success during the pandemic, the steep increase in house prices won’t be so warmly welcomed by the nation’s struggling first-time buyers.

“Despite talk of an interest rate increase, we look set to see yet further upward growth and so the outlook is a little bleak for those scrimping and saving for a mortgage deposit without the financial security of an existing home to sell.

“The small silver lining is that first-time buyers continue to pay less although this is, of course, influenced by the fact they generally purchase smaller homes to begin with, compared to second- and third-rung buyers.

“Rather than a string of half-baked schemes designed to ‘help’ first-time buyers by further fuelling demand, we would love to see the government actually address the issue of supply and build more affordable homes to satisfy our unwavering appetite for homeownership.”

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Full breakdown of regions:

The figures show August 2021’s average FTB (first time buyers) house price and annual change, August 2021’s average FOO (former owner occupiers) average and annual change and the difference between FTB and FOO prices.

Scotland –  FTB avehp: £144,829, Annual FTB avehp increase: 15.4%, FOO avehp: £218,673, Annual FOO avehp increase: 18.4%, difference between FTB & FOO: -33.8%

South East – FTB avehp: £282,188, Annual FTB avehp increase: 7.8%, FOO avehp: £420,359, Annual FOO avehp increase: 9.5%, difference between FTB & FOO: -32.9%

South West – FTB avehp: £234,911, Annual FTB avehp increase: 7.9%, FOO avehp: £328,740, Annual FOO avehp increase: 9.7%, difference between FTB & FOO: -28.5%

West Midlands Region – FTB avehp: £189,007, Annual FTB avehp increase: 10.3%, FOO avehp: £264,347, Annual FOO avehp increase: 11.7%, difference between FTB & FOO: -28.5%

East of England – FTB avehp: £267,311, Annual FTB avehp increase: 9.0%, FOO avehp: £369,261, Annual FOO avehp increase: 10.1%, difference between FTB & FOO: -27.6%

North West – FTB avehp: £163,219, Annual FTB avehp increase: 11.9%, FOO avehp: £222,594, Annual FOO avehp increase: 12.9%, difference between FTB & FOO: -26.7%

North East – FTB avehp: £126,661, Annual FTB avehp increase: 12.5%, FOO avehp: £171,464, Annual FOO avehp increase: 14.2%, difference between FTB & FOO: -26.1%

East Midlands – FTB avehp: £185,759, Annual FTB avehp increase: 10.0%, FOO avehp: £251,307, Annual FOO avehp increase: 10.7%, difference between FTB & FOO: -26.1%

Wales – FTB avehp: £167,576, Annual FTB avehp increase: 12.3%, FOO avehp: £226,229, Annual FOO avehp increase: 12.6%, difference between FTB & FOO: -25.9%

Yorkshire and The Humber – FTB avehp: £158,337, Annual FTB avehp increase: 8.2%, FOO avehp: £210,726, Annual FOO avehp increase: 9.3%, difference between FTB & FOO: -24.9%

London – FTB avehp: £455,377, Annual FTB avehp increase: 7.0%, FOO avehp: £601,844, Annual FOO avehp increase: 8.0%, difference between FTB & FOO: -24.3%

By Jamie Jones

Source: Herald Scotland

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London property: First-time buyers make a comeback

Nearly three in every ten home sales went to first-time buyers last month, the highest proportion in over a year, according to new data from various large estate agents.

It marks the highest percentage since June 2020, when 29 per cent sales went to people getting on the property ladder, according to estate agents’ body Propertymark.

It was the strongest August for sales to first-time buyers since 2016, when the percentage was also 28 per cent.

There have been signs of the housing market becoming less frenzied after a stamp duty holiday in England and Northern Ireland was tapered from July.

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Many mortgage lenders have also reintroduced low-deposit mortgages in recent months, after many such deals disappeared last year in the uncertain economy.

The figures also suggest that competition for homes remains strong amid a lack of supply.

Across the UK

Across the UK housing market, more than a third (37 per cent) of properties sold for more than the original asking price in August, up from 31 per cent in July.

In August 2020, just 13 per cent of homes sold over the asking price.

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The average number of properties available per member branch stood at 23 in August, down from 28 per branch in July.

This means there is an average of 19 buyers chasing every available property on the market, Propertymark said.

Chief executive Nathan Emerson said: “This month’s report shows an enduring appetite amongst buyers, including the ongoing wave of new buyers securing their first homes.

“Lifestyle changes are still prevalent, and buyers are now looking to a future which is very different from the one they envisioned two years ago.

“The search for green space, home offices and more flexible living is a trend that is unlikely to see demand diminish before the new year.”

By Michiel Willems

Source: City AM

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The Most and Least Affordable Locations for First-Time Buyers

As the government launches First Homes – its latest scheme designed to help first-time buyers in England onto the property ladder – new research has revealed the most and least affordable locations following a turbulent 12 months for the UK property market.

Compiled by online mortgage broker Mojo Mortgages, the First Homes scheme affordability index looked at various factors affecting home affordability in June 2021 including house prices, mortgage repayments, average annual salary and monthly take home pay to work out where in England was most and least affordable.

The figures have been released following the launch of the government’s First Homes scheme this month; designed to help first-time buyers and key workers onto the property ladder in their local areas that might otherwise have had to move to another city to afford their first home.

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First Home properties will be priced at a discount of at least 30 per cent of the original market value to allow more affordable deposits and mortgages with prices being capped at a maximum of £250,000 (£420,000 in Greater London). However, it’s important to note that this discount will apply to the lifetime of the property, meaning that same percentage discount will apply when the home is resold in the future.

Based on the average monthly mortgage payment as a percentage of income*, Oxford was the least affordable location in England for first-time buyers with the average monthly mortgage repayment taking up 49.37 per cent of a couple’s take home pay. This is based on an average property price in the city of £540,005 and an average annual salary of £31,232.

Bath (47.65 per cent) and London (47.12 per cent) followed close behind highlighting the difficulty of getting onto the property ladder in these areas. However, it’s clear there was some variance across the capital’s 32 London boroughs.

The ten least affordable areas in England based on mortgage as a percentage of income were as follows:

  • Oxford (49.37 per cent)
  • Bath (47.65 per cent)
  • London (47.12 per cent)
  • Reading (38.98 per cent)
  • Poole (38.72 per cent)
  • Cambridge (38.49 per cent)
  • Brighton (37.19 per cent)
  • Slough (36.68 per cent)
  • Cheltenham (36.38 per cent)
  • Exeter (35.03 per cent)

In contrast, it was Bradford that was most affordable for first-time buyers.

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With an average property price of £145,981 and an average annual salary of £28,790, this equated to 14.30 per cent in terms of monthly mortgage payments as a percentage of income – the lowest in England.

Blackpool (15.94 per cent) and Stoke-on-Trent (17.35 per cent) followed closest behind with the top ten most affordable areas for first-time buyers as follows:

  • Bradford (14.30 per cent)
  • Blackpool (15.94 per cent)
  • Stoke-on-Trent (17.35 per cent)
  • Sunderland (17.56 per cent)
  • Middlesbrough (17.70 per cent)
  • Hull (17.72 per cent)
  • Carlisle (17.82 per cent)
  • Durham (18.10 per cent)
  • Liverpool (18.56 per cent)
  • Bolton (19.19 per cent)

Regardless of location, the First Homes scheme could make a significant difference to a first-time buyer’s monthly outgoings once on the property ladder in terms of mortgage payments as well saving for that all important deposit.

For example, for those in London that purchase a property under the scheme, they can expect to pay on average around £766 less a month on their mortgage repayments, taking their percentage spend of income from 42.17 per cent to 32.97 per cent –  a significant saving.


Source: Property Wire

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Lenders hand out most mortgages to first-time buyers in nearly 20 years

Banks and building societies handed out more mortgages to first-time buyers in March than any time since 2002.

Across the UK, 42,330 mortgages were issued to first-time buyers in March, marking the highest monthly total since December 2002 when 44,000 were advanced, according to trade association UK Finance.

Many people who would have taken their first step on the property ladder last year may have put their plans on pause due to the coronavirus pandemic, with the market having been effectively shut for part of 2020.

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Last peak was in July 2002

A total of 58,810 mortgages were advanced in March to home movers, the highest figure since August 2007. The peak month for home mover activity was July 2004 when 93,500 mortgages were advanced.

The peak month for lending to first-time buyers on UK Finance’s records was July 2002, with 54,100 loans.

March 2021 was the original deadline for a stamp duty holiday in England and Northern Ireland, but the period has been extended.

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“Since the housing market emerged from its shutdown last spring, we have seen a remarkable recovery in demand, which continued through quarter one 2021,” said Eric Leenders, managing director of personal finance at UK Finance.

“Existing home owners have taken advantage of the stamp duty concessions, with changing working and living patterns encouraging more to use their existing equity, either to move further afield or to fund further housing purchases for themselves or family,” Leenders added.

By Michiel Willems

Source: City AM

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House prices to continue upward trend this year, Nationwide predicts

Nationwide Building Society, the UK’s second-largest mortgage lender, has predicted that house prices will continue to rise this year beyond the end of the stamp duty holiday.

The lender has warned, however, that higher costs could make it harder for first-time buyers to get on the property ladder.

The society’s chief executive, Joe Garner, said everyone had been a “little bit surprised” by how strong the housing market had been throughout the Covid crisis, even when taking government support, including business loans and wage subsidies, into consideration.

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Figures published by the Office for National Statistics last week showed house prices rose 10.2 per cent in the year to March, the highest annual increase since the lead-up to the financial crisis in August 2007.

Mr Garner said demand had been underpinned by a “structural shift” in the kind of homes that buyers were looking for in the wake of the Covid-19 pandemic, which has caused a home-working boom, and fuelled interest in larger homes with gardens outside city centres.

Mr Garner said: “People don’t say: ‘Oh look, there’s a discount on stamp duty, let’s move home.’ That’s not how it works. People are thinking of their house less as an investment and more as a home.”

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A Nationwide survey of homeowners last month found that 25 per cent were either considering, or in the process of, buying a house as a result of the pandemic, compared with 28 per cent in September. Usually, only about five per cent of homes switch hands in the UK, meaning that only a small portion of those homeowners need to act in order to keep the housing market moving.

Mr Garner continued: “There will be periods when it goes down a bit, but particularly as people are buying much more for their long-term home, it doesn’t matter so much the day-to-day value of the property if it’s somewhere they really want to live.”

Source: Scottish Legal

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Boost for first-time buyers as more ultra-low deposit mortgages hit the market

In a further boost to first-time buyers, more lenders are bringing 5 per cent deposit mortgages onto the market.

New deals announced by Metro Bank and Cambridge Building Society are not part of a new government-backed mortgage guarantee scheme which was launched this week to increase the availability of 5 per cent deposit loans.

Major lenders including Halifax, HSBC UK, Barclays, NatWest and Santander are taking part in that scheme and unveiled new 5% deposit products earlier this week.

Cambridge Building Society said that, from 5 May, it will launch deals including a two-year fixed-rate mortgage at 3.99 per cent, with a £199 application fee and a five-year fixed-rate mortgage at 4.09 per cent with the same fee. The maximum loan for this range is £400,000.

Metro Bank is now offering a five-year fixed-rate deal at 3.89 per cent for borrowers looking to get on the housing ladder with a 5 per cent deposit. The maximum loan size available is £570,000.

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The bank said it had already been developing its new mortgage when the government mortgage guarantee scheme was announced in the recent Budget.

Metro Bank launched into near prime residential mortgages in March, offering flexibility for borrowers who may be struggling to get a mortgage elsewhere.

Charles Morley, director of mortgage distribution at Metro Bank, said that the bank has been making a number of new hires across its mortgages business recently.

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Pandemic recovery

The number of low deposit mortgages generally available fell dramatically in the early days of the coronavirus crisis as lenders became more concerned about riskier loans and the possibility of house prices falling.

Under the new government scheme, lenders can purchase a government guarantee that would compensate them for a portion of their losses in the event of a repossession.

It mirrors a previous Help to Buy mortgage guarantee scheme, which was launched in 2013 in response to a similar shortage of low-deposit mortgages following the 2008 financial crisis.

By Michiel Willems

Source: City AM

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