LETTING & ESTATE AGENT

First-time buyer numbers up in April

First-time buyer numbers up in April
The number of first-time buyers outstripped the number of home movers in April, with measures such as the recent stamp duty cut and the Help to Buy scheme helping many get onto the property ladder.

Latest mortgage figures from trade body UK Finance show that 26,700 first-time buyer mortgages completed in April, up 3.5% compared to the same period last year. The £4.4bn of new lending was up 4.8% year-on-year. The average first-time buyer is aged 30 and has a gross household income of £42,000.

Although a similar number of home mover mortgages completed in April, with 25,100 people moving home, numbers were down by 4.2% compared to the same period last year.

Buying cheaper than renting in all areas of the UK

First-time buyers' mortgage repayments as a percentage of income are 17.2%, UK Finance said, lower than the 17.5% average for home movers.

Buying is now cheaper than renting in every area of the UK, according to separate research by Santander Mortgages, with the average monthly rent currently £912 per household, nearly £200 more a month than the £723 average monthly mortgage payments for first-time buyer households.  Over a year, savings from buying rather than renting add up to £2,268 a year.

First-time buyers purchasing in the capital save most over the long-term by buying rather than renting, with average rents exceeding mortgage payments by over £289 a month or £3,468 a year. The difference between renting and buying is smallest in the East of England, where typical first-time buyer monthly mortgage payments are on average £43 a month higher than monthly rent costs.

Measures which are helping first time buyers

Many first-time buyers have been helped by the stamp duty exemption introduced last November which means they don't have to pay stamp duty on the first £300,000 of the property value if buying a home costing up to £500,000. The exemption cuts up to £5,000 from the cost of buying a new home. According to the Treasury, the average saving is £1,660.  

However, the biggest obstacle for most first-time buyers is saving a deposit, although there are government savings schemes such as the Help to Buy ISA and the Lifetime ISA which are designed to help buyers build up funds. With these accounts, the government tops up contributions by another 25%. Prospective buyers can save into both types of account, but they can only use the government bonus from one to purchase a property.

Recent months have seen growing numbers of lenders introducing new mortgage deals which only require buyers to put down 5% of the property value, although according to Santander, the average deposit put down is £51,905, equivalent to a 24% deposit.

Mortgage rates for first-time buyers are currently competitive, with the Bank of England's decision to leave the base rate unchanged at 0.5% in June meaning that - at least in the short-term - rates are likely to stay low. However, with some economists anticipating that we could see a rate rise as soon as August, buyers may want to act sooner rather than later if they want to take advantage of the best deals.


If you're looking to buy your first property, speak to L & C about the various mortgage deals available.