Housing transactions propped up by first-time buyers

According to the Council of Mortgage Lender’s (CML’s) latest market commentary report, gross lending hit £18.4 billion in April.

Other report highlights included:

  • Transactions continue to be driven by remortgage activity and first-time buyers
  • Buy-to-let and home mover numbers remain subdued
  • Number of first-time buyers over the last year overtakes the number of home movers for the first time since 1996

THE ECONOMY

CML’s report states that the economy has grown slower than expected at 0.3% in the first three months of 2017.

Unemployment remains low at 4.6%, however, the Bank of England’s predictions of a rise in inflation has been realised, now sitting at 2.7%. It’s expected that this will have an impact on consumer spending, with March data showing that wages are falling.

The CML report continued to add that “given that wage growth remains weak, even in the face of rising inflation, the Bank of England’s monetary policy committee (MPC) continued to signal that it would be willing to tolerate a degree of above-target inflation.”

HOUSING

The housing market continues to be subdued, with little change in the last six months and down slightly compared to a year ago.

There have been 100,000 housing transactions on average each month, which has resulted in an average of 67,500 house purchase approvals for the past six months. The Monetary Policy Committee (MPC) has left their expectations for house approvals at a figure of 71,000 per month.

Henry Knight, Managing Director, Springtide Capital added: “Whilst 2015 and 2016 showed steady growth across all components of transactions, 2017 sees a heavy reliance on the growing purchase activity from first-time buyers. It’s fair to say that the buy-to-let stamp duty changes have reshaped the housing market, perhaps giving first-time buyers the opportunity to snap up properties, which previously would have been purchased for investment purposes. However, with the end to the Help-to-Buy mortgage guarantee scheme in 2016, continuing affordability issues and a requirement for large deposits, there is no sign of the first-time buyer market getting any easier.”

If you’d like advice on obtaining a mortgage, simply call Springtide Capital on 020 3040 4400 to book an appointment with an adviser.