Along with a boost of activity from an otherwise dormant segment, a coinciding lack of mortgages available to first-time buyers resulted in this part of the market contracting by 12 per cent last year.
So this week, Mortgage Solutions is asking: Did you notice a change in first-time buyer (FTB) business last year and how does this influence your plans for these buyers in 2021?
I did not see too much of a drop off because I’m in London and first-time buyers still benefitted from the stamp duty holiday. Even though they would have got the discount, in some cases buyers got even more of a saving.
A lot of first-time buyers in London are buying up to £500,000 if not higher.
However, I did have a couple of people say they decided to put purchasing on hold because they felt the property market was getting overheated. They also expected prices to come down this year.
But that wasn’t the majority it was a small handful.
Most people were constrained by deposit, especially where there were almost no high loan to value (LTV) mortgages and for those who were able to raise a larger deposit, the rates went up and are still fairly high.
I had a few people who were quoted before the first lockdown who came back in summer to higher quotes.
They were surprised but still proceeded because if you want to buy a property, you want to buy a property. Rates don’t tend to hold people back too much.
I have since been getting back in touch with people who just couldn’t get a 10 per cent deposit before to say there’s more product availability.
From March to June, there were enquiries coming from the first-time buyer market. Unfortunately, due to the lockdown and some of the measures taken and a lack of high LTV products, we started to see a weaning off of those.
Then when the stamp duty announcement was made there was another clamour of first-time buyers but that was quickly overshadowed by others in the market.
For the first time in a long while, homeowner enquiries outstripped first-time buyers for a period of about two months.
The issue is, without the first-time buyer market, everything halts. Without them, where does business come from? The chain has to start from somewhere.
Where it’s going to probably change is I can see some upcoming opportunities for landlords. I’ve never seen rates so low for buy-to-let mortgages and that will have another impact on the first-time buyer market.
The first-time buyer market was halted in its tracks in March and I don’t think it’s fully recovered. There are still first–time buyers looking for opportunities but not quite at the deluge that was expected.
I work in the adverse market, so a big area for this year will be debt consolidation, remortgaging and further advance. We’re strategising down those routes.
We’re not alienating first-time buyers but until product availability becomes more apparent things will just run the same course as they did before, especially for the first quarter.
With everything that happened in 2020 we did see a reduction in applications across the board.
We still completed plenty of mortgage applications for first–time buyers, but we found that the underwriting was more thorough and the timescales were extended significantly.
First-time buyers play an important part of our business plan and we will continue to focus on this area.
We do a lot of mortgages using the Help to Buy scheme, so going forward this will be for first–time buyers only.
We find that once we have helped a first–time buyer, they will come back to us over and over again. They’re also more likely to use our solicitor recommendations and protection recommendations.
That part of the market is something we really focus on and a lot of our Google ads are already aimed at those getting onto the property ladder.