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First-time buyer sales climb 11% despite wider market slowdown

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24/10/2014
The number of first-time buyer UK house completions increased year-on-year in September, defying trends of a slowdown in the market.

Statistics from Your Move and Reeds Rains showed there were 25,800 first-time buyer completions in September 2014, 11% more than 23,200 a year ago.

New buyers are also paying more for their first home. The average first-time buyer purchase price rose 3% over the same period to £150,950, the fourth consecutive month in which average purchase prices have topped £150,000.

Despite purchase prices rising, the average first-time buyer deposit fell 8% year-on-year from £28,498 12-months-ago to £26,134 in September 2014 – as Help to Buy made higher loan-to-value (LTV) lending more accessible for borrowers.

At the same time, deposits fell even faster as a proportion of annual income. The average first-time buyer deposit represented 67.6% of annual income in September, 12 percentage points lower than in September 2013.

David Newnes, director of estate agents Your Move and Reeds Rains, said: “Help to Buy has helped keep the blood pumping in the first-time buyer market over the last year, allowing borrowers struggling to save for a deposit the financial life support they need to purchase property.

“At the same time, MMR [Mortgage Market Review] regulations have performed a health check on their finances, ensuring they will be able to withstand a future base rate rise. Lenders have increased the range of higher LTV options available to borrowers, allowing the average first-time buyer deposit to fall even as purchase prices increase.

“But the sands are shifting in the first-time buyer market. Loan-to-income caps announced in June have added further restrictions for lenders to factor in, on top of the tranche of regulations implemented in April. The effect is that lending is tied to wages much more tightly than in the past. Borrowers increasingly have to prove their financial resilience to access the higher LTV deals available. There is more lending, but at the same time it is more responsible and sustainable.”

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