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Nearly half of mortgaged home purchases made by first-time buyers

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Written by: Christina Hoghton
11/01/2016
Number of first-time buyers remains buoyant at over 300,000 for second year in a row.

The number of first-time buyers totalled an estimated 310,000 in 2015, according to new figures from Halifax.

This is a huge increase of two-thirds (60%) since 2011, from 193,700 to 310,000, although slightly down (0.5%) on last year, which the lender said was because of a lack of supply.

The average price paid by first-time buyers rose by 10% in 2015, from £172,563 to £190,180; the first time it has been higher than the pre-recession peak in 2007 of £174,994.

Craig McKinlay, mortgages director at Halifax, said: “For the second year in succession, the number of buyers getting on the first rung of the housing ladder has reached 310,000. Although the average price of the typical first-time buyer home has grown by 10% in the past year, the number of buyers taking that first step onto the housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth.”

Upfront gains

The research revealed that first-timers are managing to put down a far bigger deposit than before the recession – in 2015 the average deposit paid by a first-time buyer was £32,927, an enormous 88% higher than the £17,499 put down in 2007, and 13% higher than a year ago.

In the South East the average deposit paid rose by 24% in the past year, from £35,582 to a massive £44,024.

The average first-time buyer deposit is highest in Greater London, at £91,409 – five-and-half times more than the £16,578 put down by first-timers in Northern Ireland.

Rise of the 35-year mortgage

Longer mortgage terms are becoming more popular among first-time buyers, according to Halifax’s research. While a mortgage term of 25 years has been the norm for a long time, last year a quarter of first-time buyers took out their homeloan over a much longer 35-year term.

Over the same period, the share of mortgages with a 20 to 25-year term dropped from 48% to 30%.

First-time buyers accounted for 46% of all house purchases made with a mortgage in 2015; the same as in 2014, and up from 36% in 2007.

What is a mortgage term and how do I choose the right one?

 

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