"The month of February was the main contributor to these encouraging figures, accounting for nearly 50% of the total value of first-time buyer mortgage applications for the quarter."
- Liam O’Hara, head of mortgages at first direct
The value of applications for the first-time buyer market reached £24.2 billion in the first quarter of the year, a 37% increase on the same period last year, according to CACI data analysed by first direct.
This was after a milestone month in February, where the value of first-time buyer loan applications reached £11 billion, an amount not seen since 2016. To put this figure into perspective, it was nearly double the value of the market in February 2023, which stood at £5.6 billion.
Those strong numbers are similar to 2021’s figures for the same quarter, where the total value of applications for Q1 added up to £24.7 billion. This quarter marks the strongest value for the first-time buyer growth since the mini budget in September 2022.
In addition, more first-time buyers applied for mortgages in February than any month since March 2022, with applications for the month totalling 49,982.
The first-time buyer segment accounted for an average of 35% of the total new business mortgage market value in Q1 – with the home mover category accounting for 34% and remortgages representing 31%.
The average first-time buyer loan value average across the first quarter of a the year was £215,000 – with the figure peaking at £219,340 in February - the highest average loan figure seen in recent years.
Although an increase in average loan value was also noted across home mover and remortgage categories in February, the soaring first-time buyer values were unique to this category. It was an 8% year-on-year increase of the average first-time buyer loan value for February 2023 of £202,835.
Liam O’Hara, head of mortgages at first direct, commented: “It’s been a positive start to the year across the mortgage market, with the volume of first-time buyer applications ahead of home movers and remortgages, shooting up to numbers not seen in nearly two years. The month of February was the main contributor to these encouraging figures, accounting for nearly 50% of the total value of first-time buyer mortgage applications for the quarter.
“If we cast our mind back to the New Year, we saw most mortgage providers reduce mortgage rates considerably in response to reduced swap rates. The positive impact of this was seen across the market, with first-time buyer mortgage applications flooding in across February.
“The appetite for home ownership remains consistent, with aspiring home owners acting fast in order to secure competitive rates. This shows the resilience of first-time buyers even in a higher rate environment, and the desire to get on the ladder driving the category to dominate the market when it comes to volume.
“There are a number of factors that influence loan value – but overall, an increase in average loan value is a positive sign that mortgage affordability is increasing and that people are in a position to borrow more.
“A factor could be that first-time buyers are applying for mortgages with smaller deposits opposed to necessarily opting for more expensive houses, although the data shows only a marginal increase in people opting for higher LTV mortgages of 90% and above, compared to the same period in 2023.”
