Lenders are giving fewer mortgages to First Time Buyers

February 18, 2020 / Isla MacFarlane
Lenders are giving fewer mortgages to First Time Buyers

The latest mortgage data suggests that First Time Buyers are backing away from the market or struggling to get finance, but homeowners are ready to pack up and move.

Following a good run in 2019, there were only 29,490 new First Time Buyer mortgages completed in December 2019, down from 30,840 a month earlier and just 0.3 per cent more than in the same month in 2018. However, there were 29,400 homemover mortgages completed in December 2019, 3.2 per cent more than in the same month a year earlier.

Borrowers are also taking on more debt, with First Time Buyers taking out loans 4.3% larger than this time last year, and homemovers borrowing 6.4% more.

Industry observers think it’s no coincidence that house prices were stoked following the Tories’ unequivocal victory in the December 2019 election. While First Time Buyers will bear the brunt of rising prices, homemovers are coming out of limbo.

John Phillips, national operations director at Just Mortgages, said: “If November’s figures were damning evidence of the damage caused by the political drift and delay that has characterised the last few years, the December numbers released this morning are a sign that we may finally have turned a corner.

“The general election took place halfway through the month and since then there has been a strong sense across the market that things are picking up. Although loans to first-time buyers are still fractionally down on the previous year, a 3.2 per cent increase in new loans to home-movers suggests that existing homeowners looking to make their next move on the ladder are finally beginning to come back to the market.

“This compares very favourably with the 10 per cent year-on-year falls last month and gives cause for some mild optimism that we may be seeing the much-talked-about ‘Boris bounce’ materialising. Whether it will last, is another matter.”

Conor Murphy, CEO of end-to-end mortgage broker platform Smartr365, added: “Today’s UK Finance figures round off a year of remortgage dominance within the mortgage market, as homeowners chose to ‘improve rather than move’, taking advantage of low repayment rates and stagnant house prices.

“All could be set to change, however, as we move deeper into Q1. With house prices already rising, valuation requests surging and future economic growth on the horizon, the home moving market is set for a busy start to the year. The rise of execution-only business will provide strong competition for brokers in this period, and it is crucial that the borrowers understand the value of advice when taking out the largest loan of their life, to ensure they get the best deal available.”

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