First-time buyer mortgage surge cause for optimism

What on earth is going on with the mortgage market? June marked the third consecutive month that the rate of first time buyer mortgages actually outstripped the number of mortgages being offered to those looking to move homes; a trend that has not been recorded for twenty years – and, there we were, about to believe all the hype telling us that becoming a first-time buyer in Britain was virtually an impossibility.

Further encouragement for first-time buyers can be found in the realisation that the number of buy-to-let loans handed out in June was 42% lower than the figure for the same time last year (at 6,000), meaning that there was generally less competition for the types of properties attractive to new home owners.

In fact, June saw a greater number of first-time buyer mortgages approved than at any time in nearly a decade – since 2007 to be precise – with more than 34,000 first-time buyer loans taken out over the period at a total value of around £5.5 billion. Over the same period there were just over 33,000 new home-move loans.

It is even easy to imagine that the usually po-faced Council of Mortgage Lenders must be breaking out the biscuits by now, especially as it is only a week or so since the Bank of England cut the base rate to 0.25%, meaning that it may soon be possible to find even cheaper first-time mortgage deals as we approach the autumn and winter months.

Useful to remember, however, is that it may be necessary to temper our optimism with a reminder that the interest rate cut will have an inevitable effect on savers, potentially making it that little bit more difficult to accrue a sufficient deposit – see this handy mortgage deposit savings guide for some tips on budgeting.

“These figures reveal growth in house purchase activity and in particular for first-time buyers. As ever, there is uncertainty and it will take more time and patience to understand how the market will evolve in the current environment – these figures predominantly cover activity in the run-up to the referendum,” commented Paul Smee, director-general of the Council of Mortgage Lenders.

“We still believe that the mortgage market is well capitalised, resilient and open for business, and will remain so for the foreseeable future. First-time buyers are continuing to drive house purchase lending, outperforming home- movers for the third month running. More loans were advanced to them in June than at any time since August 2007.”

News of the mini renaissance for first-time buying is also likely to be a boon to new Prime Minister Theresa May as she looks to make housing and housing affordability a priority issue for her government.

However, it is worth bearing in mind that the figures are taken from the time in the run-up to the referendum, so it may be that the markets have made some serious adjustments in the time since then.

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