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More first-time buyers on housing ladder

Mortgages to first-time buyers have hit their highest level in 12 years, according to a building society.

Across the UK, 367,038 people buying their first property secured mortgages in 2018, half of all sales.

That figure is more than double that in 2008 – 193,300 – when the financial crash impacted the market and just nine per cent below the pre-crisis peak of 402,800 in 2006.

More first time buyers on property ladder
More first time buyers on property ladder

The Yorkshire Building Society analysis is based on market-wide data from trade association UK Finance using first-time buyer data for January to October 2018 and estimated sales in November and December.

Researchers said first-time buyers now represent 50 per cent of all homes bought with a mortgage – the highest proportion since 1995.

The lender said figures suggest government schemes aimed at helping first-time buyers, such as stamp duty relief and Help to Buy Isas and Help to Buy equity loans, may have had a positive impact.

However, the figures show growth in first-time buyer mortgage numbers has slowed from eight per cent in 2017 and nine per cent in 2016 to just one per cent last year, suggesting the effect of the policies is lessening.

Nitesh Patel, Yorkshire Building Society economist, said: “Property prices have grown at a higher rate than wages over the past decade, 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 home-owners.

But he said it was encouraging to see the first-time buyer market bounce back with more mortgage lenders offering 95 per cent loan-to-value mortgages and strong competition keeping rates down.

“The combination of factors has made buying a home more accessible in recent years. But getting on the housing ladder is 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.”

Meanwhile, strains are showing in the rest of the property market. The number of homemover mortgages completed in August fell 2.3 per cent year-on-year, while remortgages were also down 0.3 per cent and new loans for buy-to-let property purchases tumbled by 13 per cent, according to separate figures from UK Finance.

Buy-to-let landlords have been hit by higher stamp duty and lower tax relief, making renting property less profitable. Meanwhile, homeowners rushed to refinance their loans ahead of the anticipated interest rate rises last year.

The increase in first-time buyer loans shifts the housing market slightly towards the younger age spectrum. The average of a first-time buyer was 30 compared to 39 for those moving home.