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First-time buyer completions up 4.1%

The number of first-time buyers completing mortgages has increased by 4.1 per cent since last year, according to UK Finance.

UK Finance’s mortgage lending trends, published today (April 17), showed that 24,800 first-time buyers took out a mortgage in February 2019 — 4.1 per cent more than in the same month in 2018.

The trade body stated this was the fifth consecutive month of year-on-year growth in first-time buyer numbers.

However, the number of current home owners moving house remained steady, rising 0.1 per cent in the year to 23,660.

The remortgaging market fared better. About 18,200 people remortgaged their home to gain extra funds — 10 per cent up on February 2018 — and those remortgaging without borrowing money increased by 7.8 per cent to 18,360.

On average, those remortgaging had a 43 per cent deposit and their loan-to-income ratio was 2.74.

This was considerably lower than residential mortgages which showed an average LTV of 72 per cent and a loan-to-income ratio of 3.37.

UK Finance stated customer engagement in the remortgaging market remained high with borrowers able to access a wide range of competitive products.

The trends showed buy-to-let mortgages were on the decline as only 4,800 buy-to-let mortgages completed in February 2019 — 7.7 per cent fewer than in the same month in 2018.

More people opted to remortgage in the buy-to-let market as 14,400 remortgages, 2.1 per cent more than the same period last year, were completed in the month.

UK Finance suggested the buy-to-let house purchase market continued to contract due to tax and regulatory changes, while buy-to-let remortgaging increased as borrowers moved from fixed rate mortgages and locked into attractive new rates.

Commenting on the findings, Dave Harris, chief executive of More 2 Life, said: “The growing number of first-time buyers in the market can in part be attributed to parents passing on wealth to their children to help with home purchases.

“With wages still failing to keep up with inflation, the pockets of most first-time buyers aren’t proving deep enough to provide the often hefty mortgage deposits they need to take a first step on the property ladder – but thankfully, this is where parents and grandparents are stepping in to help.”

David Copland, director of mortgage services at TMA, said while activity in the first-time buyer segment continued its upward trajectory, more attention was needed to help the buy-to-let market.

He said: “As previous tax and regulatory changes continue to loom over the private rental sector, advisers will prove essential in guiding these customers towards the best solutions to fit their individual needs.”

Richard Pike, Phoebus Software sales and marketing director, agreed that buy-to-let purchases continued to struggle but suggested that, like many areas that require an element of investor risk, this could have been affected by continued Brexit uncertainty.

He said: “It is difficult to overstate the impact the current negotiations between Westminster and Europe are having on the UK as a whole. We have been in a state of limbo since Article 50 was triggered and there is still no sign of a solution.

“This is, of course, having a knock-on effect and it is highly likely that the figures we will see in the coming months, which reflect the run-up to the original withdrawal deadline, will be more subdued.”

However, Mr Pike added there were positives to be taken from the UK Finance figures as the market had managed to keep ahead compared to 2018 in most areas.

He added: “When you consider these figures only tell part of the lending story in the UK, that is encouraging.”

By Imogen Tew

Source: FT Adviser