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First-time buyers dominate as cash and BTL numbers fall away – UK Finance

by: Karin Wasteson
  • 26/09/2017
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First-time buyers dominate as cash and BTL numbers fall away – UK Finance
Buy-to-let and cash transactions are down as first-time buyers continue to dominate mortgage volumes, according to UK Finance's September report, but there are regional differences.

Property transactions have averaged just over 100,000 a month since the turn of the year, according to HMRC.

The Bank of England’s Agents’ survey suggests part of the strength in first-time buyer activity is down to demand for new-build properties using the Help to Buy equity loan scheme.

Other government schemes, such as the Help to Buy ISA, boost FTB numbers as well.

Meanwhile, home movers, who benefit much less from government schemes have largely been at a standstill over the last few years. Moreover, the shortage of homes on the market for sale means that some would-be movers are struggling to find suitable homes, so also failing to put their own homes on the market, said UK Finance. 

“In the buy-to-let space, government interventions coupled with regulation has led to a flat market with around 6,000 house purchases a month since April 2016, after the stamp duty change on second properties came into effect,” said Mohammad Jamei, senior economist at UK Finance.

In addition to the change in the type of activity, the regional mix has shifted, away from London, the south east and east Anglia, towards the north of England, Wales, and Scotland.

Regions which have typically been less affordable showed signs of weaker activity, while those which are relatively more affordable have been more active.

At a regional level, the difference in affordability between the most and least affordable regions has diverged since 2013.

“This trend may reverse, and we may see some rebalancing, if the shift in activity is sustained. It’s also the case that sentiment and price expectations in regions where affordability is stretched have weakened or are negative,” said Jemai.

On the remortgage side, UK Finance expects more home-owners to refinance in the coming months, as prospects of the first interest rate rise in over 10 years gains new impetus. The strong competition and low funding costs and record numbers of term-ends will also see record numbers of homeowners taking advantage of the near record low mortgage rates, according to the market commentary.

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