Homemovers have “emerged from the shadows” since last summer, says UK Finance, with its latest quarterly figures showing the number of transactions of this type outnumbering that of first-time buyers.
UK Finance says that homemover numbers have been at approximately half their typical levels seen in 2005 to 2007 since the financial crisis in late 2008. “However, in Q1 2021, activity leaped by 82 per cent compared to Q1 2020, bringing volumes to a level not seen since 2007.”
There were 131,980 homemover loans made in the first three months of the year, the data shows, which compares to 97,450 loans made to FTBs during the same time frame.
“This perhaps shows the effect that the stamp duty holiday was having, encouraging a different sector of the market to take advantage, when FTBs already had the benefit of SDLT holiday,” says Phoebus Software sales and marketing director Richard Pike.
“With the government’s ‘First Homes scheme’ launching, along with the availability of 95% LTV mortgages and the new help-to-buy scheme, we could see the current imbalance between FTBS and homemovers levelled,” he adds.
UK Finance states: “The marginal benefit of the current stamp duty holiday accrues mostly to homemovers and landlords, because the majority of FTBs across most of the UK were already exempt, through the FTB-specific holiday which had been in place since 2017.”
It points to more granular data as well, which shows homemover growth outpacing that of FTB numbers in every region and reveals that half of all mortgaged homeowners have at least 50% equity in their home, “and a further third have between 25% and 50%.”
Refinancing also jumped in the Q1 this year, with 324,200 product transfers made – almost 150,00 of which were made in January alone. This compares to 288,500 PTs made in the first quarter of 2020. The data adds that almost all of PTs from January this year were execution-only.
Arrears remained low, with the ban on court actions cited, but UK Finance warns that both arrears and possessions are likely to rise from Q2 once these bans are lifted.
Just Mortgages and Spicerhaart national operations director John Phillips comments: “The trends from the first quarter of 2021 demonstrate the remarkable recovery the housing market has undergone since it re-emerged from the lockdown last spring.
“One potential indicator for the future of the housing market is the increase in credit card spending towards the end of the quarter.
“With hospitality opening back up, and international travel set to return, this may result in some choosing to spend on holidays and socialising, putting house-buying on the backburner for a month or two.
“While a few may delay moving, there are still a huge number of buyers in the market, and demand is still outstripping supply significantly. Therefore, the market should continue its impressive run, while perhaps slowing slightly in the coming months.”
