Despite being faced with rising house prices and deposits, the first-time buyer market remains healthy.
According to new data from the Intermediary Mortgage Lenders Association, first-time buyer mortgage applications, enquiries and completions have all risen in the past year.
More than two-thirds (67%) of first-time buyer mortgage applications were completed in the first quarter of 2017 – up from less than half (48%) a year earlier.
The overall rate of mortgage applications resulting in completions reached 69% – 11 percentage points higher than the 58% recorded a year ago.
The average number of enquiries received by intermediaries serving this segment of the market rose from 55 in the first quarter of 2016 to 60 in the same period this year.
Peter Williams, executive director of IMLA, said: “First-time buyers’ struggles have been highly publicised, with affordability stretched by rising house prices and modest income growth. However, rising levels of mortgage enquiries, applications and completions shows that a significant number of first-time buyers are still both willing and able to get a foot on the property ladder.
“Low mortgage rates have contributed to this improving outlook for first-time mortgage borrowers. However, with the Bank of England reporting that average rates are creeping up on the higher loan-to-value (LTV) products that buyers with modest deposits rely on, policymakers must continue to do their upmost to support lending to this part of the market.”
However, the figures contrast with those from the Bank of England, which show a fall in mortgage approvals for the third month in a row.
The Bank’s Money and Credit report showed that the total number of mortgages approved fell by over 3,000 to 118,370 in April.
Kay Daniel Neufeld, economist at the Centre for Economics and Business Research, said the figures suggested that the housing market was slowing as a result of buy-to-let tax relief changes and uncertainty surrounding the election.
“Activity in the market is likely to be further suppressed by political uncertainty ahead of the general election on 8 June.
“A reduction in the mortgage interest tax relief, which came into effect last month, impacts the profitability of leveraged buy-to-let investors, who will look more closely at the market and the rental income they can expect before buying property.”
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