FTB mortgages at the highest in more than a decade

First-time buyer mortgage approvals have hit their highest level in more than a decade according to figures published by Yorkshire Building Society.

Using data from UK Finance, the Yorkshire estimates 367,038 new mortgages were taken out in 2018 – the highest number since 2006.

Almost double

The number exceeded the 2007 figure of 359,000 and was almost double that for 2008 in the immediate aftermath of the financial crisis when just 193,300 new households were established.

Yorkshire strategic economist Nitesh Patel said: “Property prices have grown at a faster rate than wages over the past 12 years, which has created difficulties for first-time buyers.

“Various factors have helped to alleviate this challenging environment, although the market is still pretty tough for those wanting to become homeowners.”

Government initiatives

Nitesh believes the latest figures show that government initiatives like stamp duty relief, Help To Buy and Help To Buy ISAs have had an impact on the market.

He said: “Over the past three or four years, we’ve also seen more mortgage lenders offering 96 per cent loan-to-value mortgages, as well as strong competition driving mortgage rates down.

“This combination of factors has made buying a home more accessible. But getting onto the housing ladder is still not an easy step for many young people, as demonstrated by the increasing numbers who have received help from the bank of Mum and Dad.”

Successful

So successful have the initiatives been that first-timer buyers now account for 50% of all UK homes bought with a mortgage.

Said Nitesh: “Despite the challenges, the first-time buyer market has bounced back following the financial crisis to outperform other sectors, such as the home moving and buy-to-let markets.

“Buying your first home remains tough for many, but it’s encouraging to see first-time buyer levels at a ten-year high and climbing.”

Risen

Additional research by the Resolution Foundation has revealed that home ownership rates for the 25 to 30-year-old age group has risen for the first time in 30 years.

A spokesman said easier credit conditions and a slow down in house prices has helped young first-time buyers with new deals up by 3%.

But he warned that renting will remain the norm for the majority of young people across the country with the number of young families renting from the private sector rising to 34% from a low of 9% in the late 1980s.

Government help

The Foundation has called for government help for young tenants by making indeterminate tenancies the sole form of private rental contract and limiting rent rises.

Spokesman Daniel Tomlinson said: “Politicians should act to increase the number of homes available to buy, use the tax system to favour first-time buyers over second-home owners, and ensure that the private rental sector is fit for purpose – providing the security that many young families need.”