The First Direct first-time buyer trends report revealed that the value of applications in March was also 42% up on February’s £8bn.  

However, despite the application value reaching its highest level since September last year, the first quarter of 2023 was down by 26% compared to the same period in 2022. In March last year, the first-time buyer application value reached £10.8bn, marking a two year high. 

Activity was more subdued in April as the value totalled £6.2bn, however, this was still the second highest amount in six months. 

The mortgage market as a whole, including homemovers and remortgagors, reached a value of £26.6bn in March. This was the first time the value of applications had passed £20bn since September last year, and it was also £8.9bn up on February.  

Carl Watchorn, head of mortgages at First Direct, said: “Typically, March and April tend to be some of the busiest months of the year when it comes to first-time buyer activity. March usually sees a sharp spike in applications after what is often a quiet start to the year. 

“It’s really encouraging to see the market recovering during March and April to a level of applications not seen since September 2022. A closer look at this data also reveals that the value of first-time buyer loans has doubled since Q4 last year; a segment fundamental for a vibrant housing market.” 

Average loan amounts climb over the year 

The average first-time buyer loan was £211,766 in April, which was an 8.8% increase or more than £17,000 rise since the start of the year. 

First Direct said it was also the highest figure since July 2022 when the average loan amount reached £212,153. 

Loan sizes among first-time buyers saw the biggest jump, but average homemover loans also rose by £14,200 since January while there was a £9,500 increase in average remortgage loans. 

Watchorn added: “The news that average first-time buyer loans are increasing is likely indicative of increased confidence in the sector, although it does once again highlight the challenge faced by many young people trying to bridge the gap between average income and the average house price. 

“It’s also important to consider that the average first-time buyer house deposit is now more than £60,000. Faced with higher rates than we’ve seen in a number of years, many buyers will be looking to save up as big a deposit as possible in order to secure a cheaper rate against a lower loan to value (LTV) product.”