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First-time buyers bounce back spurred on by cheap mortgage rates

First-time buyers are bouncing back and reclaiming their share of houses for sale after being frozen out of the market by nervous lenders last year.

Between 2019 and 2020, the proportion of first-time buyers purchasing homes fell from 56 per cent to 51 per cent. But data collected by Reallymoving through conveyancing quotes shows they are making a comeback thanks to the return of high loan to value mortgages.

Early indications show first-time buyers now account for 55 per cent of the market.

First-time buyers have been able to rebound so quickly because, despite rising prices, mortgage affordability has remained the same due to competitive rates with mortgage payments costing 31 per cent of take-home pay.

While house price inflation was seen by all types of buyers, those purchasing for the first time have experienced a 2.5 per cent increase compared to a 10 per cent rise for upsizers and 15 per cent increase for investors.

The cheapest part of the UK for first-time buyers to get on the property ladder is the North East where a starter home can cost £137,000 on average. In stark contrast is London where fledgling buyers can expect to pay in excess of £430,000 – three times as much.

Rob Houghton, chief executive of Reallymoving, said: “Although there is clearly a relationship between affordability and house price rises, with mortgage rates continuing to be at historic lows and the help the government are giving to first-time buyers through [multiple] schemes, many can still afford to buy their first home.

“Anyone thinking that the recently quoted double-digit house prices means they can’t, should check property prices locally and speak to a mortgage broker to find out what they can afford in their desired area. If working from home becomes more regular in the future, this may even open up fantastic opportunities for first-time buyers to get on the ladder in more affordable areas if they are commuting less regularly.”

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