The figures reflect a slow October 2022, with a dip in demand from first-time buyers between September and October this year.
According to First Direct, the value of first-time buyer applications in October was £5.4 billion. This was an 11 per cent drop from September’s figure of £6 billion, but a nine per cent increase year-on-year.
That’s partly down to an especially slow October last year, following the disastrous mini-Budget. Nevertheless, it’s the first time this year that the first-time buyer market value has shown a year-on-year increase, said the bank.
It’s in contrast to the total mortgage market which was 11 per cent down on last October at £16.5 billion, due to a lag in remortgage applications.
Liam O’Hara, head of mortgages at First Direct, said: “After reaching its peak in June, market volatility sent the first-time buyer market on a downwards trajectory for two months, before showing signs of recovery in September.
“Figures are down in October, but there is still indication that the market is stabilising, even though many first-time buyers will still be facing challenges around affordability and saving for a deposit.
“With many lenders, including First Direct, reducing rates in November, we might see an increase in activity as a result.”
Increase in loan size
The average first-time buyer loan edged back over £200,000 in October, reaching £202,176.
It’s the first time the average loan value has breached the £200k barrier since June 2023, and a small year-on-year increase of 2.6 per cent.
O’Hara added: “The factors that influence average loan values are numerous, but an increase can be a positive sign that affordability is increasing.
“Several house price indexes show that house prices are on a soft downwards trajectory, so an emerging counter trend could also suggest more first-time buyers are buying properties with smaller deposits as those higher LTV rates start to come down.”