Growing FTB confidence sees transactions up 6.6%

by Filed under General

New data from Your Move & Reeds Rains has highlighted that during February, transactions for first-time-buyers hit 21,000 - a rise of 6.6% annually.

Adrian Gill, director of estate agents Your Move and Reeds Rains, had this to say: “February is a traditionally quiet period for the first-time buyer market. The month sits awkwardly between the New Year property market rush and the spring-summer activity high. However, beyond that seasonality, these figures demonstrate the strong, steady underlying growth that comes with growing first-time buyer confidence.

This optimism may begin to reveal itself more clearly in March, when an Easter uplift may sweep away any residual doubts among some first-timers. While the more general mismatch between buyers and sellers will continue to exert upwards pressure on prices, a combination of pluck and poise from first-time buyers will ensure that this does little to impact the overall trend of growing demand at this end of the market.”

The costs of buying and owning a first home have remained broadly stable in February, with lower borrowing costs balancing larger prices and deposits.

February’s average mortgage rate represents the lowest mortgage rate for first-time buyers in over five years.

High LTV lending also remains strong, with February’s average ratio reaching 82.5% – a figure that is high relative to the average LTVs recorded in 2014/15.


e.surv's Mortgage Monitor recorded a 5.7% month-on-month increase in the number of higher LTV loans in February.

In February the average deposit put down by a first-time buyer stood at £29,451 – an increase of 14.7%, or £3,766, on an annual basis. This uptick has been a factor in the growing proportion of FTB income which is consumed by deposit costs. In November 2015, a deposit ate up just over two-thirds (67.4%) of an average first-time buyer’s annual income, whereas in February of this year the average deposit consumed, on average, almost three-quarters (74.9%) of their income.

However, the amount of first-time buyer income that is consumed by monthly mortgage repayments has hardly changed between February 2015 and February 2016. Over the last twelve months this has risen 0.8 percentage points, from consuming 19.6% of an average first-time buyer’s income to consuming just over a fifth (20.4%) of such income.

Adrian Gill continued: “First-time buyers have had the benefit of some favourable February conditions. While those setting a first foot on the ladder this month have had to shell out more in terms of headline prices – as they seek to compete with buy-to-let investors for small, affordable homes – mortgage lending has easily kept pace. Equally, although many first-time buyers will baulk at the rising deposit costs, there is a silver cloud to this grey lining. Larger deposits tend to indicate growing incomes and larger mortgages, meaning an impressive number of first-time buyers are accessing the capital to purchase a first home, even in a sellers’ market."