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First-time buyers (FTBs) borrowed more in 2016 than in any other year since the Council of Mortgage Lenders’ records began back in 1974. This latest data reveals that a combination of low interest rates and governmental schemes, such as Help to Buy, has helped to boost entry into a challenging housing market for FTBs.

Tax changes open the door for FTBs

FTBs borrowed a total of £53.2bn for home-owner purchases in 2016, which is up 13% from the previous year. Some experts suggested that the market could suffer with so much uncertainty and changes on the horizon. But it has in fact shown great resilience. The buy-to-let market has no doubt been affected by a number of implemented and upcoming changes, such as 2016’s stamp duty changes and alterations to tax relief in 2017. But its loss has been the gain of fledgling house buyers, with end of 2016 figures indicating a strong uptake compared to the previous year.

95% lending continues

One lender has reported a 91% increase in FTBs looking for a 95% LTV mortgage between January 2016 and January 2017. Now that the Government’s Help to Buy: Mortgage Guarantee Scheme has ended, several lenders are pledging to continue to lend to borrowers with moderate deposits, especially at 95% LTV. It seems that the need to lend to those with small deposits shows no signs of slowing.

A helping hand from the Government

New data reveals that one in three properties outside London, totalling nearly 70k homes, were purchased with the support of Help to Buy loans between April 2013 and April 2016. Uptake was not as strong in London and the South East due to higher house prices, despite the Help to Buy: London scheme increasing its loan limit to 40%.

With the Help to Buy: Equity Loan scheme set to continue for several more years and the Help to Buy ISA and now the Lifetime ISA supporting those looking to save for a deposit with a government bonus, there are still several options for FTBs looking to save for or purchase their first home.

As your adviser, we would love to talk to you today about your borrowing and remortgage options

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