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Mortgage lending to first-time buyers and homeowners remortgaging has increased year-on-year according to the latest data from UK Finance.
The data revealed there was a 1.9% increase in new first-time buyer mortgages completed in 2018 compared to 2017, and the highest number of people buying their first home in 12 years. In the remortgaging market, there was 9.3% increase in new homeowner remortgages completed in December 2018 compared to the same month in 2017, however the number of homemover mortgages completed in the month fell by 1.3% compared to the same month the previous year.
While the first-time buyer market strengthened, UK Finance data shows that the buy-to-let market continues to struggle, with new buy-to-let home purchase mortgages completed in December 2018 dropping by 5.6% compared to the same month the previous year. There was some good news in this sector however, with the number of buy-to-let remortgages completed in December 2018 increasing by 25.3% compared to December 2017.
"The cost of mortgages does appear to be on the rise as a whole, fuelled by the base rate rise in August, but lenders were heavily invested in attracting new borrowers and retaining those who may have come off a deal at a quieter period of the year," Rachel Springall, finance expert at Moneyfacts said. "Lenders were focused on meeting their annual lending targets, but at the same time, it may have been difficult to improve their range by rate alone due to the squeeze in their margins. Therefore, providers revisited their incentive packages as a way to entice prospective borrowers, such as by offering cashback or creating a bundle of cost-saving incentives upfront.
"As we move forward, borrowers may well be cautious to move home or buy their first property due to economic uncertainties, but those who are looking to save some cash on their mortgage would be wise to revisit the Best Buys to fix into a better rate or package before rates rise further still."
Jackie Bennett, director of mortgages at UK Finance, added: "Homeowner remortgaging saw strong growth driven by customers locking into attractive rates, a trend we expect to continue in 2019 as more fixed-rate mortgages come to an end."
Commenting on buy-to-let lending, she continued: "Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reaches a record high of almost 170,000 last year, suggesting many landlords remain committed to the market."
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