First-time buyer numbers hit highest level in seven years

Posted 15 January 2015

One of the UK’s largest lenders has reported that the number of first-time buyers has hit its highest level in seven years. The Halifax has estimated that 326,500 people got onto the property ladder last year, more than a fifth more than in 2013.

First-time buyers are also putting down smaller deposits than in recent years and their repayments are taking up a smaller proportion of their incomes.

First-time buyer numbers up 22% in 2014

The Halifax has estimated that 326,500 people bought their first house or flat in 2014, a rise of 22% compared to 2013. This is the highest number since 2007, before the global financial crisis.

“Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time,” says Craig McKinlay, mortgages director at the Halifax.

The lender also reported that the average first-time buyer put down a smaller deposit in 2014. The average deposit size fell by 7% on 2013 to £29,218 compared to £31,582 the year before.

Thanks to lower mortgage rates and better affordability checks, new property owners are also spending a lower proportion of their incomes on their mortgages than in previous years. According to the Halifax, in the third quarter of 2014, first-time buyers were spending an average of 32% of their disposable incomes on paying the mortgage. This compares to 50% of their incomes back in 2007.

However, while the cost of borrowing and the deposit requirements have fallen, first-time buyers paid more for their property in 2014. The average first-time buyer paid £171,870 in 2014, a 9% rise on the previous year.

Mortgage approvals in November fall to 17-month low

While the number of first-time buyers rose in 2014, the rest of the mortgage market didn’t perform as strongly as the year drew to a close. New figures from the Bank of England have revealed that the number of mortgages approved for house purchases fell to a 17-month low in November.

Just 59,029 home loans were approved for house purchases during the month, below the average of 63,191 recorded over the previous six months and down by more than 22% on the 76,574 offered in January.

The Bank’s figures suggest that after renewed activity in early summer, the market began to slow again approaching the autumn. November’s figure for approvals was the lowest since June 2013, and combined with a fall in the number of remortgages and other secured loans the total number of mortgages approved during the month fell to 99,566; its lowest since April 2013.

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