First-time buyers behind more than half of all mortgaged house sales last year to hit new record

First-time buyers were behind more than half of all mortgaged house sales last year, according to Halifax 

The first-time buyer market rebounded last year, according to the mortgage lender, with 19 per cent more people getting on the ladder than in 2023.

In total, the number of people buying a property for the first time rose to 341,068 last year, up from 287,060 in 2023.

Halifax said that first-time buyers made up 54 per cent of all mortgaged home purchases last year, the biggest majority on record.

Much of this was likely down to a more stable mortgage market, with rates staying broadly between 4 and 5 per cent for most of 2024.

Between the start of July and October last year, the lowest five-year fixed rate mortgage fell from 4.28 per cent to a low of 3.68 per cent. 

Meanwhile, the lowest two-year fix fell from 4.68 per cent to a low of 3.84 per cent, albeit rates have risen since then.

This represented an improvement from the chaos of 2023 where a combination of base rate hikes and concerns over inflation saw average two-year fixed rates reach a high of 6.86 per cent in the summer, according to Moneyfacts, while five-year rates hit 6.35 per cent.

Amanda Bryden, head of mortgages at Halifax said: ‘Last year saw a big increase in the number of first-time buyers, up almost a fifth from 2023. 

‘This likely reflects an improvement in mortgage affordability, as interest rates eased and stabilised, providing more certainty for those stepping on to the ladder.’

The surge in first-time buyer activity is also likely been fueled by the fact that many are aware that stamp duty costs will increase from 1 April.

From 1 April, the stamp duty nil-rate threshold for first-time buyers will drop from £425,000 to £300,000.

As a result, a first-time buyer purchasing a home priced between £300,000 and £500,000 will face a 5 per cent stamp duty charge on an additional £125,000 of borrowing, adding thousands of pounds to the overall cost.

This means that instead of paying no stamp duty on a purchase worth £425,000, from April they will soon pay £6,205.

Santander reported it saw a 130 per cent increase in mortgage applications in the final three months of 2024 compared to the same period in 2023.

The mortgage lender puts this increase largely down to buyers rushing to secure a property purchase ahead of the stamp duty changes.

Graham Sellar, head of the intermediary channel for mortgages at Santander said: ‘We all know that buying a home – whether it’s our first or our forever home – comes with significant costs. 

‘Every penny counts when considering things like legals and removals costs, so it’s great to see so many people make the most of the holiday and secure their new home ahead of 1 April.;

How are first-time buyers making it work?

Even with mortgage rates hovering between 4 and 5 per cent for most buyers, this represents a far more challenging situation than in years prior to 2022 when rates were hovering between 1 and 2 per cent for the most part.

With average property values for first-time buyers now around 6.6 times the average salary, it’s a tall order affording a home alone. 

New buyers are putting down £61,090 deposit on average with the typical starter home costing £311,034 last year. 

Many are therefore teaming up with someone else. Almost two thirds of mortgage completions last year were in two or more names, according to Halifax.

There is also the fact that first-time buyers are saving for longer. The average first-time buyer in 2024 was 33 years old, which is two years older than a decade ago.

Jemma Sparrow, 40, from Chipping Sodbury in South Gloucestershire made it on to the property ladder for the first time last year. 

‘After renting for years, it was always our dream to own a home to call our own,’ said Jemma. 

‘However, it’s been challenging, especially with my husband being self-employed. Balancing rent, raising our children and being able to put enough money aside towards a deposit was tough.

‘We were always looking at ways to save extra money. Finally, last November, just before I turned 40, we were able to buy our forever home.

‘I still cannot believe it’s actually ours and so much bigger than the previous houses we rented. My favourite part is being able to decorate it and change things to exactly how we want.’