The number of first-time buyers achieving their dream of home ownership reached a 12-year high in 2018, according to industry data published by UK Finance.
A total of 370,000 new first-time buyer mortgages were completed during the year, up 1.9% compared to 2017’s total. This represents the strongest year for first-time buyers since 2006, when 402,800 loans to young buyers were completed.
Low mortgage rates and government support schemes such as Help to Buy were credited with boosting the chances of new buyers.
On a monthly basis, December 2018’s lending totals looked much like previous months. There were 30,000 homemover mortgages completed in the month, down 1.3% year-on-year.
Also boosted by low mortgage rates, the number of remortgages rocketed by 9.3% to 34,000 in the year to December. However, there was less good news for the buy-to-let market as completions fell 5.6% to just 5,100.
First-time buyers, however, face different challenges depending on where in the country they are located. Those in London and the South East must borrow many times the average local salary to purchase a home, according to Halifax research.
In the London borough of Brent, for example, the average house price is 13.3 times average local earnings. Elsewhere in the capital, Hackney homeowners must pay 11.8 times the average salary.
The most difficult place to buy outside of London was Oxford, where individuals must borrow 10.9 times the average local salary to get onto the ladder.
The North West of England and Scotland were the areas which had the lowest house price to earnings ratio. In Pendle, Lancashire, the average property costs 2.6 times the typical salary in the area while in Copeland, Cumbria, the ratio was also 2.6 times.
The research also showed that the amount needed for a deposit also varies by location. In London a buyer must have 26% of the purchase price as a deposit while in Wales this is just 11%.
House prices increased by 2.5% in the year to December, according to the Office for National Statistics. This growth rate was down from 2.7% the previous month, and is the lowest growth rate recorded since July 2013.
This slowdown was attributed to a fall in prices in many parts of London and the South East. However, the North East was the biggest faller, where prices dropped by 1% in the last 12 months. The region remains the cheapest place to buy a home in the UK.
The average UK house price was £231,000 in December 2018, £6,000 higher than at the same point in the previous year.
Finally, there is much more choice for first-time buyers as the number of loans at 90% and 95% LTV increased substantially between January and February.
There are now 645 products available to borrowers with a 10% deposit this month, 26 higher than in January. The number of 95% LTV loans also increased, rising from 298 to 325 – an increase of 27.
Richard Sexton – Business Development Director, e.surv Chartered Surveyors
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