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First-time buyer mortgage demand surges in February

Written by: Shekina Tuahene
The value of mortgage applications made by first-time buyers (FTB) rose sharply in February and reached £5.6bn, the highest figure since September last year.

This was a 40% rise on the £4bn value of applications in January, CACI data analysed by First Direct showed. 

This increase was reflected across the wider market which saw the overall value of mortgage applications go up by 39% to £17.7bn compared to January. 

The volume of applications made by first-time buyers fell behind slightly with a 33% increase. 

Across the total market, mortgage application volumes rose by a similar 36% to 82,315 from January to February. 

A steep incease in applications

Carl Watchorn, head of mortgages at First Direct, said: “February has seen a steep increase in mortgage applications across the housing market, after a subdued four-month period. It’s not unusual for January to be one of the quieter months of the year, with many house movers and buyers delaying plans until after the festive period. We saw a similar uplift of activity between January and February last year, which saw the value of mortgage applications shoot up 45% month on month.” 

Watchorn said March proved to be a “record month” for first-time buyer activity in 2021 and 2022 with the value of applications exceeding £10bn. He said while the market would continue growing, it was “less likely” for this to be repeated this year. 

Average FTB loan exceeds remortgage value 

The average loan size for a first-time buyer came to £202,835 in February 2023, up from £194,582 as of end of January. 

This was the first time since September last year that average application values were more than £200,000. In September 2022, the average application value was £210,340. 

Watchorn said people borrowing against cheaper properties or saving larger deposits led to the lower application loan amounts from October 2022 to January 2033, and said the rise in average lending suggested the market was stabilising. 

It was also the first time in two years that application values for prospective homeowners exceeded that of remortgagors, which had an average value of £201,133. 

Subdued recovery 

Although the first-time buyer market is on the up, First Direct said volumes were still “subdued” compared to the last two years. At £5.6bn, the first-time buyer market is just over half the values seen in February and March last year when average monthly values were £7.3bn. The average value was £8.1bn in 2021. 

Watchorn said: “Over the last two years, Q2 has been a month of strong performance for the first-time buyer market. If this trend persists this year, it will be a good indication of the direction of travel for the second half of the year.” 

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