Low mortgage rates and Brexit uncertainty helped the number of people taking their first step on the property ladder during the usually quiet summer month reach a 12-year high.
In fact, not only were first-time buyers taking advantage of lower, more competitive rates but they were also benefiting from a range of incentives and new products which have been introduced to encourage movement onto the ladder.
Helping hand
Martin van der Heijden, chief strategy officer at Habito, said the rise in first-time buyers was also helped along by the introduction of new mortgage products.
“First-time homebuyers are being supported by competitive low mortgage rates, continuing high employment figures and the impact of Brexit uncertainty on house-prices,” he said.
“We’re also seeing some much-needed industry innovation in terms of first-time buyer-specific mortgage products.”
As well as several of the high street banks offering deals which allow borrowers to take out mortgages with linked family savings instead of a deposit, there has also been a rise in 40-year mortgages which reduce monthly repayments.
Habito itself has also introduced a ‘fast track’ product which enables first-time buyers to turn their mortgage into a cash advance, giving the benefits associated with being a cash buyer.
Home movers staying put
At the same time, while first-time buyer numbers were increasing, the number of people moving home dropped.
Indeed, the figures from banking industry trade body, UK Finance, revealed while first-time buyer numbers went up by 0.7% between August 2018 and August 2019, home mover numbers plunged by 5.5%.
Experts think this was a symptom of Brexit uncertainty, which had caused people who wanted to move to hold off until after the storm had passed.
Tomer Aboody, director of property lender MT Finance, said: “Fewer home mover mortgages isn’t surprising at all. These are usually at the higher end of the pricing bracket, where people are more cautious in spending until we have a resolution in the Brexit saga.”
Outlook for future first-time buyers
While the summer saw the first-time buyer market peak, there will be many would-be homeowners who will want to know whether conditions will remain healthy going forward.
Indeed, Shaun Church director of Private Finance, thinks it depends on how the Government and the mortgage industry continue with incentives and innovation.
He added: “Government and industry must not however think that their job is done when it comes to first-time buyers.
“The average age of a first-time buyer in the UK remains high at 32, and many of today’s new homeowners are taking out mortgages with terms lasting as long as 40 years in order to afford repayments.
“This new generation of homeowners may therefore not achieve mortgage free status until their early 70s.
“Continued efforts need to be made to ensure that homeownership remains attainable early in adulthood, to avoid jeopardising this generation’s financial security later in life.”
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