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First-time buyer activity takes over as homemoving contracts further

  • 08/06/2018
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First-time buyer activity takes over as homemoving contracts further
First-time buyers are becoming increasingly successful in securing mortgage offers and completing purchases while homeowners now move an average just once every two decades.


According to data from the Intermediary Mortgage Lenders Association (IMLA), 76% of first-time buyers’ mortgage applications through intermediaries resulted in a completion during Q1 2018, the highest number since the tracker began in 2016.

For every 100 applications, an additional 28 first-time buyers completed on a mortgage in Q1 2018 compared with Q1 2016 (76 vs. 48).

This quarter’s figures compare with just under half of first-time buyers securing a mortgage (48%) in Q1 2016, rising to 67% in Q1 2017.

IMLA’s tracker also suggests 90% of first-time buyer applicants secured a mortgage offer in Q1 2018, up from 70% two years earlier, with 85% of those offers completing, compared to 69% in Q1 2016.


Once every twenty years

In contrast, homemovers have been hit hard as record low market liquidity and a lack of affordable housing hampers moving prospects.

Homeowners now only move once every 19.2 years vs 7.4 years in 1988, IMLA said.

The number of home movers making successful mortgage applications decreased by three percentage points from Q4 2017, from 77% to 74%.

This represents a change in fortunes for the first time since the tracker began; successful homeowner applications rose from 64% in Q1 2016 and 72% in Q1 2017 to reach 77% in Q4 2017.

IMLA suggested a number of factors were responsible including high transaction costs, homeowners getting older and greater opportunities for people to draw upon the equity of their homes to fund retirement.

Lack of suitable housing may also be deterring some owners of larger properties from moving.


End first-time buyer focus

IMLA executive director Kate Davies noted that while first-time buyers’ struggles have been highly publicised, as a sector, they were performing better than any other in the mortgage market, both in the short-term and on an annual basis.

In contrast many homemovers continued to struggle with hurdles including high house prices relative to earnings, stricter mortgage affordability criteria and a lack of suitable homes.

“This continued focus on first-time buyers has come at the expense of the rest of the market, which is becoming increasingly illiquid,” Davies said.

“Recognition and support from both policy makers and lenders is needed for this group, to improve housing turnover and transaction volumes in the wider market.

“The government should take this pivotal juncture as an opportunity to reassess where in the market injections of new homes are needed: working with developers, planners and lenders to ensure the whole market is well-served,” she added.


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