First-time buyers have remained more “resilient” in the face of “substantial hikes in mortgage rates” that home movers and landlords, data from Savills shows.  

The Bank of England lifted the base rate 14 times in a row from November 2021 to 5.25% last August, where it currently still stands at a 15-year high.  

Last April, the number of FTBs taking out a mortgage was 30% below their 2017-19 average, points out the property agent’s UK residential research analyst Toby Parsloe in a note.  

But by April of this year, the figure had recovered to just 11% below the same two-year average.  

By comparison, home mover and buy-to-let mortgages, were both 24% below their 2017-19 average levels in April this year.  

Parsloe says: “What this shows is that FTB numbers have maintained their share of around 29% of the whole sales market, while home movers and BTL purchases as a proportion of the market have decreased, and the proportion of cash buyers has risen.”  

This is down to four key reasons, the note says.  

The property firm points out that FTBs have “adapted to challenging economic conditions” by taking out longer mortgage terms to reduce monthly payments while interest rates have been high.   

The average term length in the first four months of 2024 was 31 years, according to our analysis of UK Finance data, up from the 2017-19 average when it was 29 years.      

It adds that in the new homes market, FTBs have been “willing to compromise on size or location to get on the housing ladder”.  

High rental growth which has pushed potential FTBs “to take the plunge as soon as possible, if they can afford to”, is another factor.  

Annual rental growth in April 2024 in the UK was 6.6%, according to Zoopla. This has ticked down in recent months from its peak of 12.2% in July 2022, but still remains high compared to historic levels.  

The agent’s note adds that greater stability in the mortgage markets at the start of this year has also helped support FTB numbers.   

Parsloe says: “Lenders initially cut rates in January and February, which improved affordability for potential buyers and unlocked demand, leading to a boost in market activity.   

“While rates ticked up slightly after this, they remain below their peak in 2023.”  

The boost to affordability meant that FTB numbers were just 6% below their 2017-19 average in February 2024, “demonstrating the pent-up demand ready to be released when mortgage rates decrease”.  

Parsloe says that “affordability pressures are likely to continue to ease” following a BoE base rate cut, which Oxford Economics forecasts will come as early as August.   

However, other economists say the BoE’s rate-setting Monetary Policy Committee’s concerns over high wage growth and services inflation, mean a first cut may come as late as November. 

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