First-time buyers hit highest level since crisis

First-time buyers hit highest level since crisis

The number of first-time homebuyers has hit its highest level since the start of the financial crisis, according to figures from Halifax.

Data from the bank indicates the number of first-time buyers reached 335,750 last year, a jump from the 312,900 reported in 2015.

The last time levels were that high was in 2007, just before the financial crisis hit economies around the world.

Article continues after advert

The number of first-time homebuyers opting for 30 to 35 year mortgages instead of the traditional 20 to 25 year mortgages has dropped, suggesting many will still be paying off the loans a lot later in life.

In 2016 more than a quarter of all first-time buyers with a mortgage opted for a 30 to 35-year term, a share that has grown sharply from 11 per cent in 2006. 

On the other hand, the share of 20 to 25-year mortgage term has fallen from 53 per cent to 28 per cent during the same period. 

Last year nearly half of all house purchases financed by a mortgage were made by first-time buyers, which is the highest level since 1996.

Martin Ellis, housing economist at Halifax, said: “First-time buyers play a crucial role in the housing market, and each transaction has an impact further up the chain, as well as helping to drive levels of housebuilding."

He pointed out that the number of buyers getting on the housing ladder exceeded 300,000 for the third year in succession.

This, he said, is a welcome boost for current homeowners, house builders and the government. 

“Continuing low mortgage rates, high levels of employment have supported the market, and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”

But Mr Ellis also pointed to the contrasting picture across different regions in the UK, with the average house price for first-time buyers in London – which has one of the youngest populations in the UK – reaching an “eye-watering” £400,000.

This more than twice that in the south east, the next most expensive region.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the findings are good news in terms of the increase in number of first-time buyers.

But he also said this is also indicative as to what parents and grandparents put themselves through so they can afford those deposits,

"If the housing market is going to function properly, as the government has told us so many times it should, then we need to protect first-time buyers.

Mr Leaf said first-time buyers are the "life blood" of the market because they tend to buy at the bottom and trade up, whereas investors buy at one level and stay there.

"Although lenders are supposed to be providing support via Help to Buy now that the mortgage guarantee element has been withdrawn, on the ground we are finding it is not happening in all cases."

He also said more flexibility on lending criteria at higher loan-to-values is required.