If you’re wondering which way the property market is moving, then be heartened by the Council of Mortgage Lenders (CML).
It says that while the number of home loans dropped 1% year-on-year, the number of first-time buyer loans has increased by 9%, driven in part by parents re-mortgaging to help their offspring get on the property ladder, it has been claimed.
The number of first time borrowers in the market hit 337,000 last year, the highest level in any twelve month period since the financial crash of 2008, the CML says.
Re-mortgaging activity in the property market increased by 54% between December last year and January this year, and although this is driven in part by competition among lenders to offer lower and lower rates, agent Haart says it’s also driven by ‘bank of mum and dad’ parents.
“We are seeing more and more parents on the ground looking to release equity in their homes to support increasing numbers of young people who are leaning on their parents for support to get onto the property ladder,” says Haart’s CEO Paul Smith (pictured, left).
“With rents sent to increase as landlords are squeezed, and ONS figures showing that house prices have reached 10 times the average salary for a third of people in England and Wales, parents are becoming increasingly concerned that their children will not have the same opportunities for home ownership that they did.”
Ishaan Malhi, CEO of online mortgage broker Trussle (pictured, right), says: “Today’s figures confirm that mortgage switching has become the major force [within the property market] driving up lending totals. It’s been almost half a year since the Bank of England cut interest rates down to 0.25%, and the number of people switching mortgage to secure a more suitable deal has since soared, jumping by 21% in January year-on-year.”
But the number of homes sold might have been even higher if it hadn’t been for the ‘annus horribilis’ endured by landlords during 2016 including the Stamp Duty increases and imminent tax relief reductions. The CML says house purchase activity in the buy-to-let sector was 16% lower in January compared to a year before.