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First-time buyers sparking early-year market growth

It’s been a busy start to the year for the property market according to the latest mortgage data. January’s figures highlighted some 66,350 mortgage approvals last month, including a high proportion of completions (27%) from buyers with small deposits, such as first-time buyers.

That’s according to e-surv who noted that the number of mortgage approvals typically drops in January, but 2019 started with a boost compared to December of 4%.

Some of the most active first-time buyer regions include Yorkshire and the North West where borrowers have been more than happy to help buyers onto the property market.

Yorkshire saw nearly 37% of all mortgage approvals last month against high LTV mortgages, followed by nearly 33% in the North West and just under 33% in Northern Ireland.

London, as a comparison where a 5% deposit on a 2-bed flat can still require a down payment upwards of £25,000, the lending proportion to potential first-time buyers was a little over 17%.

Director at e-surv, Richard Sexton commented that: “There are many predictions for the housing and mortgage markets in 2019, ranging from the bullish to the more cautious.

“But the data for January shows that the market has started the year in reasonable health, with approvals rising compared to December 2018.

“Hard-pressed first-time buyers will be pleased to see a swing towards borrowers with small deposits this month. If this pattern continues across the year, it will be a welcome relief to those struggling to get a foot onto the housing ladder.”

Cheaper mortgages and more product availability

And it’s not just increasing wages and the growing popularity of Help to Buy ownership mechanisms that are spurring on first-time buyers

The number of high-street products designed to help those with small deposits take their first steps on the property ladder has also increased, with 46% more high LTV mortgages available now than 12 months ago according to Defaqto.

These mortgages offer an attractive solution to new home buyers who have managed to save up some deposit cash or have been offered a few thousand by family, to be able to secure a mortgage with just a 5% deposit and own the keys to bricks and mortar for the first time.

Read more: First-time buyers spurring on housing market with increasing completions and mortgage lending

And with increased availability comes bigger competition which has helped drive down rates on these high LTV mortgages, with one of the best rates available today (2.86% from Barclays) significantly lower than the best offering last year, which stood at 3.49% – a potential saving of nearly £70 a month over a fixed-rate two-year initial period.

Brian Brown, head of insight at Defaqto noted that: “Buying a home is a huge investment and high prices have kept it out of the reach of many for years. It looks like the cost of buying a home has just got a bit easier for first time buyers…”