Brokers claim first-time buyers are starting to reap rewards of buy-to-let clampdown

There was little sign of the traditional “summer lull” during August, with first-time buyers starting to take advantage of fewer landlords adding to their portfolios, the Mortgage Advice Bureau claims.

Estimates of mortgage lending and feedback from brokers showed steady activity levels in August and suggested an increase in first-time buyer applications as landlords hold back due to the Stamp Duty and mortgage interest relief changes, the broker said.

Brian Murphy, head of lending for MAB, said the political and economic client had put some “discretionary buyers”  off, but reported an “upswing” in first-time buyers over the month.

He said:  “We are still seeing a healthy number of those purchasing due to life circumstances, such as moving home due to work or family factors, together with a  oticeable
upswing in first-time buyers taking advantage of the fact that fewer landlords are adding to their portfolios at the current time, meaning that there is less competition for entry level stock in many areas of the country.”

The broker network’s figures, based on its adviser mortgage application activity, suggested buyers borrowed and paid less to purchase a property during August.

The average purchase price during August for buyers was down 1.2% to £247,129, while the average loan dropped 1.7% to £171,846

First-time buyers also saw property purchase prices decrease slightly to £208,994 in August, from £209,864 in July, the figures show.

In the remortgage market, the average value of a loan fell by 0.6% to £176,566 while the average property value dropped from £322,009 to £320,952 during August, down 0.6% compared with last year.

Buy-to-let landlords borrowed 1.1% less between July and August at £135,160, down 3.1% annually.

The average buy-to-let loan was £199,483, down 3.95% annually.

The typical loan-to-value (LTV) in August remained at 70%.

Brokers estimated that the average applicant age across buyers, landlords and those remortgaging was 36, while the typical first time buyer age was 31.

Murphy added: “It’s normal to see a slight cooling in house prices over the summer months, as typically it’s a quieter period with properties taking longer to sell, therefore vendors tend to price slightly more competitively in order to secure a buyer. However, in some areas of the UK, an upwards movement in pricing has been observed, supporting the fact that prices remain robust in a number of towns and cities.

“With independent industry bodies such as RICS suggesting in their latest residential market survey that they anticipate the current levels of available stock across most parts of the UK to remain at current historically low levels for the foreseeable future, it’s likely that as we move into the start of the autumn the current constant picture will remain, perhaps assisted by those who are now looking to ensure that they are moved into their new home and settled before Christmas.”

Meanwhile, data from e.surv supports claims of market activity continuing, with surveyors estimating mortgage approvals up by 7.8% year-on-year in August, a total of 66,145 loans.

Small deposit borrowers – those with a deposit of 15% or less -–also increased their market share again, up to 20.3% of all loans, e.surv claims

Richard Sexton, director of e.surv, said: “As the summer draws to a close, the UK mortgage market is in a much healthier position than a year ago.

“A year ago the market was dealing with reverberations of the Brexit vote, but the past 12 months have seen a strong recovery for the mortgage industry and the outlook for the future looks more settled.”

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