[ad_1]
The number of first-time buyers who purchased a home with a mortgage in 2023 is estimated to be the lowest in a decade, according to a building society.
Yorkshire Building Society calculated that, across the UK, there were around 290,000 first-time buyers in the mortgage market in 2023, shrinking by a fifth (21%) compared with 2022 (when the total was 370,287) and the lowest number since 2013 (260,000).
In 2021, the number of first-time buyers was put at a 20-year high, at over 400,000, amid the coronavirus pandemic-fuelled “race for space” as more people were able to work from home.
In December 2021, the first of a string of Bank of England base rate increases started, pushing up borrowing costs, including mortgages. Interest rate rises are used by the Bank as a tool to affect spending habits in the UK and bring down inflation.
In recent months, rates have been kept on hold, and the recent easing of inflation has fuelled speculation about when rates might start to decrease.
The fall in first-time buyers last year was less severe than the decrease in the overall number of buyers, the Society said.
This meant the estimated proportion of first-time buyers represented a bigger share of home buyers overall last year, at 54%, increasing from 53% in 2022.
It was also significantly higher than the 41% of buyers who were taking their first step on the property ladder a decade ago.
The Yorkshire said that, while activity across all borrower types has fallen due to higher interest rates, cost-of-living pressures and high house prices, first-time buyers remain determined to overcome these challenges to invest in their own bricks and mortar.
But it added that borrowers are finding it harder to meet affordability requirements due to the combination of higher house prices, rising day-to-day costs and interest rates.
Ben Merritt, the Society’s director of mortgages, said: “First-time buyers are the lifeblood of the market and are still clearly keen to buy.”
He pointed added that: “The wider market relies on them, not least to support purchases higher up the chain.”
Yorkshire Building Society’s group economist Max Shepherd said: “Current market expectations suggest several rate cuts in 2024, which would ease mortgage rates in the first half of the year.”
The Society’s calculations were based on lending data from banking and finance industry body UK Finance up to September 2023, with buyer numbers for October, November and December 2023 being estimated by Yorkshire Building Society, in line with previous first-time buyer patterns.
[ad_2]
Source link