First Time Buyer loan applications soar

Applications from first time buyers have grown by 33% so far this year with FTBs now making up a higher proportion of the home purchase market than at any time since at least 2016.

New analysis from the Yorkshire Building Society and business consultancy CACI shows that activity among FTBs is up almost 25% over the past eight years; they now make up almost 40% of mortgage applications, compared to some 30% for the equivalent period in 2016.

And the proportion of mortgage applications by FTBs exceeded that of home movers for the first time in January.

YBS director of mortgage distribution Jeremy Duncombe says: “Things have changed substantially since UK Finance issued its forecasts last November.

“The picture is a fast-changing one, and despite continued inflationary pressures keeping interest rates higher than hoped; coupled with ongoing volatility caused by economic and political uncertainty, consumer confidence seems to be returning.

“While there is continued uncertainty and it’s therefore important to be cautious, the year has got off to a far better start than predicted, with housing market activity on the rise. House prices are predicted to settle and maybe even increase moderately throughout the rest of the year, with more stable mortgage rates resulting in more buyers deciding to dip their toes back in.

“The increase in first-time purchaser numbers could be attributed to a number of factors. We know from our own research that many are making life-changing decisions to prioritise homeownership over other milestones like starting a family.

“High rental costs are making the prospect of owning a property more appealing and many may feel they’re just not prepared to put off buying any more in the hope rates might reduce.”

The average monthly rental figure in England stands at £1,276 yet the average monthly mortgage payment for a first-time buyer sits around £1,139, prompting
Duncombe to add: “When you consider figures like these, it’s not hard to understand why first-time buyers are increasingly aiming at home ownership despite the higher-interest-rate environment