Number of first-time home buyers reaches fresh high

The number of first-time home buyers has jumped to levels not seen for over a year, according to data from the industry.

Industry body UK Finance said there were 35,500 new first-time buyers in August, up 2% on the same month a year ago and the highest since June 2017. New lending was £6.1bn, 5.2% higher year-on-year.

The average loan-to-value was unchanged on the previous month at 85% and the average loan size was £145,495.

Home-mover mortgages were down 2.3% at 38,000, although the amount lent – £8.5bn – stayed the same. The loan-to-value was 73.1% against 72.5% in July, and the average loan size was £184,400.

There were also 0.3% fewer new homeowner remortgages, at 37,100, and a heavy 13% fall in new buy-to-let purchase mortgages, to 6,000. Buy-to-let remortgages where ahead 4.5% at 13,800.

Jackie Bennett, director of mortgages at UK Finance, said: “Overall house purchase completions remain stable, driven largely by the number of first-time buyers.

“Buy-to-let remortgaging saw relatively strong growth, due in part to the number of two-year fixed deals coming to an end. This suggests that while new purchases in the buy-to-let market continue to be impacted by recent tax and regulatory changes, many existing landlords remain committed to the market.

“However, the homeowner remortgaging market has softened slightly, reflecting the many borrowers who had already locked in attractive deals in the months preceding the Bank of England’s base rate rise.”

UK Finance said that the average age of first time buyers in August was 30, with a gross household income of £42,000, while for those moving house, the average age was 39 with income of £57,000.

After the financial crash, mortgage lenders tightened lending rules and increased deposit requirements, but low interest rates continued to shore up the housing market. As a result, younger people were left struggling to get onto the housing ladder, but there has been a concerted effort to change that through schemes such as Help to Buy.

In August, the Bank of England put up rates for the first time since March 2009, from 0.5% to 0.75%.

UK Finance was formed in 2017 and brought together a number of finance trade bodies including the British Bankers’ Association and the Council of Mortgage Lenders.