Number Of First-Time Buyers Hits 20-Year High | moneyfacts.co.uk

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Rachel Springall

Rachel Springall

Finance Expert & Press Officer
Published: 04/01/2022
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Number of first-time buyers hits 20-year high

Analysis by Yorkshire Building Society has revealed the number of first-time buyer transactions in 2021 was estimated to have breached 400,000 for the first time since 2006, before the ‘Great Financial Crisis’.

The coronavirus pandemic may well have caused financial restraints for some consumers, however a combination of low borrowing costs, the Stamp Duty land tax holiday and launch of the mortgage guarantee scheme boosted the first-time buyer market.

Another factor which made homeownership more possible for some was the ability for borrowers to save more disposable income. The proportion of households’ disposable income saved nationally rose to its highest level since records began in 1963, to 14.3% in 2020, up from 4.9% in 2019, according to the Office for National Statistics (ONS) households’ saving ratio.

The previous peak in first-time buyer transactions was in 2002, which totalled 531,800. Commenting on the analysis, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said: “The performance of the first-time buyer market in 2021 has been extraordinary, particularly against the backdrop of uncertainties caused by the lockdown in the early months of the year. There are some strong drivers of demand that explain the increased volumes. Low borrowing costs is an important factor and the increased availability of more low deposit mortgages has also been an enabler, mostly for first-time buyers. Unemployment has also been falling for the last year and the jobs market has been getting stronger since the phased re-opening in April.”

Despite the positive news, 2022 may not be able to keep pace with the volume of first-time buyer transactions. “In the near-term housing demand will continue to exceed supply, however with prices at an elevated level in comparison to local earnings, this should dampen activity. Therefore, it’s unlikely that we will continue to see first-time buyer numbers at this level in 2022 and beyond”, said Mr Patel.

A rise in product choice for borrowers with low deposits

Research conducted by Moneyfacts.co.uk reveals the number of mortgage deals for those with a low 10% deposit rose each month during 2021. In January 2021 there were 160 deals at 90% loan-to-value and at the start of December 2021 there were 706.

In 2020, there were very few deals available to borrowers with a low deposit for most of the year, due to many providers pulling their range during the UK lockdown. The uplift in product choice throughout 2021 was then a substantial change for first-time buyers ready to get a deal but unable to find the right one a year before.

Whether borrowers are looking at a two year fixed rate mortgage or even a five year fixed rate for peace of mind, it’s important they weigh up the true cost of any deal and not just compare by rate alone.

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