Mortgages  

First-time buyers fall to lowest level in two years

First-time buyers fall to lowest level in two years

First-time buyer numbers have fallen to their lowest number in two years, new data reveal, due to rocketing property prices as well as a lack of new homes.

According to the latest first-time buyer tracker report from Your Move and Reeds Rains, there were only 60,900 transactions from first-time buyers in the first quarter of 2015, compared to 79,900 in the previous quarter.

This is the lowest quarterly total since the first quarter of 2013 when there were just 51,000 new buyers.

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In the latest figures for March 2015, the monthly total for UK first-time buyer transactions now stands at 23,300. While higher than the often quiet months of January and February this still represents fewer new buyers than the same month a year ago - down 3.7 per cent.

In the first quarter as a whole, the price paid by first-time buyers has risen to its highest in four years. In Q1 2015 the average FTB price stood at £152,681, up from £149,836 in the last quarter of 2014.

The average mortgage rate for first-time buyers in March was 3.64 per cent average - the lowest in over five years. Average loan to value ratio for March’s first-time buyers of 83.5 per cent was the highest since April 2014.

Cheaper mortgage rates have supported lower monthly mortgage repayments as a proportion of first-time buyers’ income. In March the average FTB dispensed 19.9 per cent of their gross income on repayments against their new mortgage, compared to 20.1 per cent in February.

In addition, new buyers paid less on average for their first home in March than in February, with the average transaction value down 1.1 per cent on a monthly basis, and now 3.3 per cent lower than at the start of 2015.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said: “Cheaper mortgages and a steadier property market should be boosting first-time buyers.

“Enthusiasm for the idea of homeownership is as strong as ever and it’s a great time to get on the ladder according to these headline fundamentals. Yet for many thousands of would-be new buyers there is still a very real difficulty in matching their personal finances to a home they can afford.

“The real bottle-neck is a much more serious and longer-term problem. First-time buyer numbers have flat-lined for two years because a lack of new homes is catching up with the property market.

“It’s not the election itself that matters most – it’s the next five years and the decades after that which will count. Even now, with the extra support of record low mortgage rates and Help to Buy, the property ladder seems to be missing several rungs.

“Politicians need to get serious about building more homes.”

ruth.gillbe@ft.com