As the number of first-time homeowners has increased, the availability of mortgages increases for new homeowners. What does this mean for the sector?
Over the past 12 months, the percentage of mortgage contracts available to first-time homeowners has increased. The number of transactions has decreased year by year. However, the availability of mortgages has generally declined throughout the COVID-19 pandemic.
As of February 1, 2020, 1,635 mortgage contracts were available to new investors. A year later, that number fell to 1311, but the percentage of the buy-lease market available to new owners has increased from 61% to 65%.
Eleanor Williams of Moneyfacts says: “Overall uptime contracted sharply over the past year, making it even more positive to note that at 65%, the proportion of the market available to new owners increased by 4% year-on-year. annual. , which means potential investors are spoiled for choice and also indicates that providers are committed to serving this population of borrowers. “
The current state of the mortgage market
At the end of 2020, mortgage approvals hit a 13-year high and continued at record levels. With the extension of the stamp duty holiday, the industry will likely remain busy in the months to come. Mortgage loan availability even recently hit its highest level since the first nationwide foreclosure in March 2020. It shows that lenders continue to gain more confidence.
The government also recently announced the new mortgage guarantee system, which will provide greater mortgage availability to homebuyers with 5% deposits. This will especially help first-time buyers find more mortgages with smaller deposits.
An increase in the number of new tenant owners
Over the past year, there has been an increase in the number of small, first-time rental owners. The stamp duty holiday and low interest rates have prompted more new homeowners to enter the buy-lease industry. In times of instability and uncertainty, and when savings rates are particularly low, UK property can be a particularly attractive form of investment.
With the increase in the number of new homeowners in the market, lenders have gained confidence and are increasingly willing to lend to new homeowners. Over the next few months, the availability of mortgages will likely increase further, providing more choice and more competition.
As of February 1, 2021, the average two-year fixed rate for new owners was 3.1%. And the five-year average fixed rate was 3.66%. However, there are deals that are much more affordable than these average rates. The lowest rate currently available is 1.64% for a two-year fixed mortgage.
“Those wondering if this is the right time to invest would do well to seek professional and qualified advice to support them and navigate their choices,” comments Eleanor Williams.
“There may be advantages to starting up as a limited company, some products may need to think about how many properties they may have in their portfolio and of course whether the timing is appropriate for their own situation. Careful planning and ensuring that they protect all investments will be vital in these uncertain times. “
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