Record-High Mortgage Lending Activity Recorded in Q1

Mortgage lending activity attributed to home movers reached an all-time high during the first three months of this year as homeowners across the UK set their sights on more spacious homes with private gardens.

According to the latest figures published by the Financial Conduct Authority (FCA), movers accounted for 42% of total mortgage lending activity during Q1 2021. This is an enormous leap from the 27% recorded during the same period last year and the highest since records began in 2007.

Meanwhile, data from Halifax indicates another significant spike in average house prices, potentially pricing many first-time buyers out of the market. The average market value for a UK home increased by more than £22,000 over the past year, reaching a new all-time high of £261,743 during May, according to Halifax.

Consequently, the share of loans issued to first-time buyers during that time increased by just 2% compared to the same period in 2020.

Shifting property purchase intent

Figures published by Zoopla indicate a major shift in property purchase intent among UK movers and buyers, which is not being matched by supply. This is resulting in significant increases in average house prices in key regions across the country, making it difficult for first-time buyers to find homes within their budgets.

Over the past four years, the number of 3- and 4-bedroom family homes available on the UK market has declined significantly each year. Meanwhile, smaller flats with 1 to 3 bedrooms are currently on the market than at any point since 2017, as buyers set their sights on spacious homes away from busy urban centres.

The market is also being fuelled by the impending deadline of the government’s temporary stamp duty holiday. Even then, many economists and lenders believe that the momentum the real estate sector has built over recent months will carry it through until the end of the summer, at least.

Even in the face of major economic uncertainty in the wake of the pandemic, official figures indicate the fastest average UK house price growth in more than a decade.

Strong performance throughout Q1

According to the figures published by the Financial Conduct Authority, total mortgage lending activity for Q1 this year was around 26.5% higher than the first three months of the year in 2020. A total of £83 billion was borrowed by the UK public in the form of mortgage products across all classifications.

Remortgaging activity fell significantly during the same period, having plummeted 14% compared to the same time last year. This is the worst performance for this section of the market since 2007.

Meanwhile, the share occupied by buy-to-let property owners remained relatively stable, while first-time buyer mortgage activity increased only slightly compared to last year.