Movers to Outpace First-Time Buyers for the First Time

Ian Lewis[1]

Ian Lewis

Money Savings Advice Movers to Outpace First-Time Buyers for the First Time

First-time buyers are set to be overtaken by existing homeowners as the housing market's driving force for the first time.

New research shows that the number of sales to first-time buyers has started to fall, with movers likely to take over as the market's lifeblood until at least 2021.

Real-estate website Zoopla reported that demand from homeowners had grown by 48%+ compared to a paltry 11%+ from first-time buyers, who traditionally drive the market's growth.

The research attributed the slowdown to first-time buyers' reliance on high loan-to-value (LTV) ratio mortgages- which allow buyers to only pay a small percentage of their home's value upfront.

The sudden withdrawal of these products from the market means that would-be homeowners have been hard-hit by the economic shockwaves of the Coronavirus pandemic.

In 2019, around one in five mortgages were 90%-plus LTV. But in the wake of economic uncertainty, most lenders have stopped offering such high LTV mortgages, which are seen as risky for lenders amid the possibility of a crash in house prices and of borrowers falling into arrears as job insecurity lingers.

Only yesterday, Clydesdale and Yorkshire bank walked back its 85%+-plus mortgages to "protect" and improve" its service.

A spokesperson from the bank said:

We've temporarily reduced the range of mortgages we offer to new residential and buy-to-let customers

Though the lender assured customers that it would review its mortgages again at the end of October, it is in the majority of high street banks who have taken a more cautious approach to lending in the face of uncertain times.

For millions of first-time buyers, they are faced with a choice: save potentially tens of thousands more for a deposit, or put their dreams of home-ownership on hold.

First-time buyers have been a driving force of housing sales over the last decade. They remain a key buyer group, but lower availability of higher loan to value mortgages and increased movement by existing homeowners means a shift in the mix of home buyers into 2021.

said Zoopla's Research and Insight Director, Richard Donnell

In recent years the popularity of 90% LTV mortgages has boomed in parts of the country with below-average house prices. What is White Goods insurance??

As a result, the sudden disappearance of these products from the market has had a different effect on the housing market in different parts of the country.

Yorkshire, the North West, West Midlands, and the North East have all seen very sluggish first-time buyer growth compared to this time last year.

The hardest-hit market for first-time buyers has been London; however, researchers point to other possible reasons for the slowdown in the capital.

London, as ever, tells its own unique story. As a higher-priced market, 90% LTV lending is limited to those on high incomes or those with larger deposits - signalling a new subset of affluent first-time buyers. But as our figures show, London is not immune to the effects of reduced LTV lending. Weaker first-time buyer demand in London will also reflect that more first-time buyers are looking outside the capital for their first home - factoring in less commuting and more flexibility in working from home - and moreover, most likely, the need for a smaller deposit.

Said researches

Despite the setbacks faced by first-time buyers, the market as a whole has enjoyed an unexpected boom after a 50-day shutdown due to lockdown measures.

 Pent-up demand, a stamp-duty holiday, and people being forced to reevaluate their living arrangements through lockdown have all been cited as driving factors behind the mini-boom.

 As demand outpaces supply, market growth as a whole is pegged at +2.6% compared to September 2019.

Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

How does Money Savings Advice work

Money Savings Advice is an independent editorial company providing detailed information about numerous financial niches with the aim of helping consumers make informed financial decisions. We aim to provide hints, tips and techniques to help you make your money work for you. However, we are not perfect, and we accept no liability if anything we write about goes wrong.

  • The information detailed on Money Savings Advice does not constitute financial advice. It is always advised to do your own research to make sure the product/solution we write about fits your circumstances.
  • The aim of Money Savings Advice is to match you with a financial advisor, claims management company or another financial service company that can help you with your financial needs.
  • Money Savings Advice aim to provide the most up to date and accurate information about all financial subjects, and as such we sometimes link to other websites, but we (Money Savings Advice) can’t be responsible for their content.
  • Money Savings Advice is independent and not linked to any financial company.


Who are Money Savings Advice

Money Savings Advice is a trading name of RMM Digital Publishing Ltd. Registered trading address, First Floor, 85 Great Portland Street, London, W1W 7LT. Trading in England and Wales, company number 11550143 with data protection number ZA747669.

Back to top