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First and second-time buyer trends

New figures from the Council of Mortgage Lenders (CML) and the Post Office have revealed some interesting property trends. First-time buyers seem to be doing quite well, with CML data showing a sharp jump in the number of first-time buyers in the second quarter of this year.

Second steppers, on the other hand, are still struggling, with the Post Office revealing that the average second-time buyer has to wait 14 years before he can buy a new property.

First-time buyer numbers increase

The CML figures show that 68,200 new buyers bought their first home in the three months to June of this year, giving the largest quarterly total since 2007.

As well as a rise in the number of first-time buyers, there has also apparently been an increase in the amount these new buyers are borrowing to fund the purchase of their first home. The average size of a first-time buyer loan was £117,000 in June, up on the £112,500 that was loaned on average the previous month.

As a result, says the CML, there has been a stronger growth in the value of loans advanced to first-time buyers. This totalled £3.5 billion in June – an increase of 9% in value compared to May and 40% on June last year. According to the CML, this increase is likely to be linked to the growth in house prices in recent months.

Affordability of loans remains unchanged

Although first-time buyers borrowed larger amounts in June, the overall affordability of these loans remained unchanged from the previous month, and continued to account for around 19.3% of first-time buyer income. This unchanged affordability is positive news, and is likely to be the result of falling interest rates and increases in income, says the CML.

In total, first-time buyers accounted for 46% of all house purchase loans in June. This is an increase on the 44% they accounted for in May and is well up on the 38% they have averaged since 2007.

Average age of second-time buyers increases

Second-time buyers are the subject of a separate property report by the Post Office, which finds that second-steppers have to wait 15 years longer to buy their new home than home-owners did in the 1960s.

According to the report, those currently living in their first home managed to take their first step onto the property ladder at the age of 28, but face a wait of around 14 years on average before they can expect to move up. The average age of second steppers is therefore 42.

In contrast, those who have already made this leap and are currently second-time property owners did so at the age of 34, ending up with a head start of eight years.

In the mid-1960s, second-time buyers had to wait just three years before moving on from their first home. The average age of a first-time buyer between 1965 and 1969 was 25. They then moved onto their second home at the age of 28.

Second-time buyers face their own challenges

“Taking that all-important step onto the housing ladder sometimes seems like the biggest hurdle a homebuyer will face,” said John Willcock, Head of Mortgages at Post Office. “However, we can see that it doesn’t get any easier as people try to move up the property ladder and second-time buyers can face their own set of challenges.”

According to the Post Office’s findings, there are a number of factors that could influence a second-time buyer’s decision to move home:

  • 60% would be more likely to move if house prices were to fall,
  • 45% would consider a move if they found their dream home,
  • 41% would be influenced by competitive mortgage rates, and
  • 24% said their relationship status played a big part, and they would be more likely to take the next step up the property ladder if they were planning to get married or start a family.

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