First-time buyers (FTBs) continue to dominate the UK housing market with a total of 300,307 mortgages completed by this home buyer group in 2020.
Despite the pandemic restrictions and economic downturn, the number of FTBs topped the 300,000-mark for the sixth time in the past seven years in 2020, Yorkshire Building Society has estimated.
The data also showed that FTBs made up 50 per cent of mortgage approvals, a similar proportion to 2019. Covid-19 impacted the mortgage and housing markets throughout the year, causing physical valuations to be paused for two months in spring and earnings to fall. House prices rose after the Chancellor put in place a nine-month Stamp Duty Land Tax (SDLT) holiday, which is due to end by March.
Since 2016, FTBs have been dominating the housing market, accounting for 50 per cent or more mortgage approvals each year. The FTB group accounted for 36 per cent of the mortgage approvals in 2007 and has been constantly increasing its share. FTBs will continue to remain a critical group for house-builders, who are coming up with FTB homes taking into consideration their preferences.
Yorkshire Building Society has predicted that two factors are likely to impact FTBs in the next two years. “The follow-on Help-to-Buy scheme is more restrictive in terms of regional house price caps. Secondly, the expected rise in unemployment is likely to weigh heavily on the young, with younger workers already bearing the brunt of falls in income throughout the pandemic,” Yorkshire Building Society said in its latest report.
Nitesh Patel, Strategic Economist at Yorkshire Building Society, said: "Given the significant challenges of 2020, it’s not surprising the number of first-time buyers has fallen. It is however encouraging that more than 300,000 mortgages were completed enabling people to buy their first home, despite the restricted availability of low deposit mortgages, rising house prices and the economic impact of Covid-19, which has particularly affected younger consumer groups."