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First-time buyer numbers drop to three-year low outbid by deposit-rich

  • 26/07/2021
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First-time buyer numbers drop to three-year low outbid by deposit-rich
Affordability pressures bore down on first-time buyers ahead of the first stamp duty holiday deadline in June, according to an Imla report, as other deposit-rich buyers beat them to the punch.


The Intermediary Mortgage Lender Association (Imla) Covid update report confirmed the proportion of first-time buyers had dropped to its lowest level since 2017, despite numbers picking up in recent months.

Landlords, those moving home or second home buyers benefited the most from the stamp duty holiday as affordability pressures pushed up the deposit and loan sizes needed to buy properties.

The report said: “By contrast, landlords have taken full advantage of the stamp duty holiday, with more than 12,000 purchases in March, the highest since March 2016.”

Imla estimates that buy to let’s share of industry net lending grew to about a third in the first quarter, its strongest showing for four years. The trade body added that 2021 will be the best year for buy-to-let lending since 2016, with £13bn of house purchase buy-to-let lending.

Landlords have also benefited from strong rental demand away from London, but rents in the capital are the most affordable for a decade.


PT versus remo


As quicker, easier transactions than remortgages, product transfers leapt in popularity in the first quarter, with a total of 324,200, up from less than 290,000 a year earlier.

The report said: “While large numbers of maturing products in the second half may slow this trend, it is clear that the current frenetic housing market conditions favour product transfers, as they can be carried out without the need for mortgage advice, valuation or conveyancing.

The trade body also observed that the current buoyant conditions in the UK housing market primarily reflect a shift in household demand prompted by the Covid pandemic, rather than the temporary stamp duty holiday. It said that while the tax break has distorted the market, it does make it likely that conditions and inflation will settle down later this year.

“But, with much buyer demand coming from older and equity-rich homeowners, there is little reason to expect a sharp reversal in sentiment or activity,” added the trade body.


Lending projections

The intermediary trade body has also revised its gross mortgage lending prediction upwards to £285bn, the highest figure since the market record of £362bn in 2007, but revised it down from £286bn to £280bn in 2022.

Kate Davies, executive director, IMLA said: “Following a difficult period in the wake of the coronavirus crisis, it is very encouraging to see yet another positive prediction for the remainder of 2021. Our findings forecast that 2021 will see the highest level of mortgage lending since 2007 and, with a combination of Government support helping to underpin new purchases and a bumper year for product maturities, we expect this high demand to continue.”

Find the full report and previous publications here.

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