Monday, 6 December 2010

First Time Buyers

First time buyers now account for only 15 percent of new mortgages. Nevertheless, the number has recovered slightly relative to a year ago.

How should we interpret the increasing proportion of first time buyers? Overall, mortgage activity is a fraction of what it was before the crisis. There are few signs of a sustained recovery in lending.

At the same time, lending rates are at an all time low, and prices appear to have stabilised. The combined effect of lower rates and remortgaging has reduced mortgage costs for existing home owners. This has kept a cap on arrears, which have stabilised at around 3 percent of all mortgages.

Economic policy has long favoured debtors at the expense of savers. It has favoured homeowners over renters, and speculators over producers.


Electro-Kevin said...

We're on emergency interest rates at the moment so there's not much point in trying to rationalise any of it.

If you really want to get on the housing ladder (which I think you would have done by now if you really wanted to) then try to work out what's going to happen when interest rates revert to normal ... and do your best to work out when.

That's when we'll know the true state of the market.

London estate agent said...

This looks like a recovery in the housing market. That is what I have noted this year.

Mark Wadsworth said...

Thanks for that, but the percentage is meaningless - can you track down absolute figures?

FTBs are always said to be 'the life blood of the housing market', or in my terms, 'the cannon fodder of Home-Owner-Ism'.

Alice Cook said...


Approximately, there are 50,000 mortgage approvals a month (see my earlier post). Of which, about 18 percent are first time buyers.

The concept of FTB is quite an elastic one. Often, FTBs have previously had mortgages.


Mark Wadsworth said...

The concept is elastic, but let's assume that the people who compile the stat's are consistent (it is relative changes not the absolute figure that matters).

9,000 FTB per month = 100,000 per year = only about ten per cent of each year's cohort of potential FTB's (about 1.5 million people, but many buy as couples) is being suckered into the Home-Owner-Ist web.


Alice Cook said...

The majority of FTBs are couples. The FSA have data showing that.

Large LTV loans have disappeared. Those FTBers are putting down large deposits.

Given that most brits don't have two pennies to rub together, I would hazard a guess and say that FTBers are far from typical.

Steven_L said...

Bank of Mum and Dad. If I got married I could buy via BOMAD.