1 May

First Time Buyer Tracker - April 2015

Posted 1/05/2015 by: Reeds Rains

Worst quarter for first-time buyers in two years

  • First-time buyer (FTB) transactions drop to 60,900 in the first quarter – lowest since Q1 2013 (51,000)
  • March 2015 sees 23,300 first-time buyers, up since winter drop-off, but still 3.7% lower than March 2014
  • Comes despite FTBs paying the lowest mortgage rates in over four years – averaging 3.64% in March
  • Average first-time deposit now under £25,000, as LTVs reach 83.5% – the second-highest in four years

The first quarter of 2015 has seen the lowest number of first-time buyers complete property transactions for two years, according to the latest First Time Buyer Tracker from Reeds Rains.

The total number of first-time buyer (FTB) transactions for the first quarter of 2015 stood at 60,900, a sharp fall from 79,900 in 2014 Q4 and the lowest quarterly total since Q1 2013 – when 51,000 new buyers joined the property ladder.

In the latest figures for March 2015, the monthly total for UK first-time buyer transactions now stands at 23,300. While higher than the often quiet months of January and February (up 24.6% on February’s total) this still represents fewer new buyers than the same month a year ago – down 3.7% since March 2014.

The news comes despite a 3.64% average mortgage rate for first-time buyers in March – the lowest in over five years – and an average loan to value ratio (LTV) for March’s first-time buyers of 83.5%, the highest in a year (since April 2014).

Cheaper mortgage rates have also supported lower monthly mortgage repayments as a proportion of first-time buyers’ income. In March the average FTB dispensed 19.9% of their gross income on repayments against their new mortgage, compared to 20.1% in February and 21.9% of income in March 2014.

Adrian Gill, director of estate agent Reeds Rains, comments: “Cheaper mortgages and a steadier property market should be boosting first-time buyers. Enthusiasm for the idea of homeownership is as strong as ever and it’s a great time to get on the ladder according to these headline fundamentals.  Yet for many thousands of would-be new buyers there is still a very real difficulty in matching their personal finances to a home they can afford.

“Some might also point to election uncertainty and that could be a partial brake.  However, the real bottle-neck is a much more serious and longer-term problem.  First-time buyer numbers have flat-lined for two years because a lack of new homes is catching up with the property market.  It’s not the election itself that matters most – it’s the next five years and the decades after that which will count. Even now, with the extra support of record low mortgage rates and Help to Buy, the property ladder seems to be missing several rungs. Politicians need to get serious about building more homes.”

Full details of the First Time Buyers Tracker can be found here