The number of first-time buyers looking to secure their first step on the property ladder with a mortgage in 2023 is at its lowest level in a decade, according to a leading building association.
Around 290,000 first-time buyers entered the mortgage market in 2023, down more than a fifth (21 per cent) on 2022, according to Yorkshire Building Society (YBS). This figure is the lowest since 2013 (260,000).
The decline was less severe than the overall decline in overall buyer numbers, with overall buyer activity in the UK property market falling by 30 percent over the same period, the company said.
Despite the challenges, first-time homebuyers remain determined to make their mark, but many borrowers are finding it increasingly difficult to meet affordability requirements due to a combination of higher home prices, rising daily costs and interest rates.
Ben Merritt, mortgage director at YBS, said: “First-time buyers are the lifeblood of the market and remain keen to buy.”
“The wider market relies on this, not least to support purchases further down the chain.”
“There is no doubt that their ambitions are influenced by many factors, which have seen the market shrink by almost 30 per cent this year, but their numbers are down just 21 per cent.
“This shows a positive feasibility study as first-time buyers cut corners in the property market to get on the property ladder.”
YBS said the latest figures reflect findings from its latest mortgage research report, which found that four in five (78 per cent) first-time homebuyers believe home ownership is becoming an “elite privilege” and that these would-be homeowners are saving up big investments. Life milestones, including getting married (25 percent) and starting a family (15 percent), and preceding everyday luxuries, including vacations (55 percent), to save for their first home.
Max Shepherd, economist at YBS Group, said: “Current market expectations point to multiple rate cuts in 2024, which will lead to lower mortgage rates in the first half of the year.”
The number of startups was estimated at more than 400,000 in 2021, the highest level in 20 years, reflecting the pandemic “race for space” as more people will be able to work from home.
December 2021 saw the first of a series of interest rate hikes by the Bank of England, pushing up borrowing costs, including mortgages. Raising interest rates is used by the Bank as a tool to influence the cost structure in the UK and reduce inflation.
Interest rates have remained unchanged in recent months, and a recent slowdown in inflation has fueled speculation about when rates might start to fall.
YBS’s calculations were based on UK banking and finance sector credit data up to September 2023, with the number of buyers for October, November and December 2023 consistent with YBS estimates consistent with previous new buyer models.
Source: I News
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