First-time buyers accounted for the largest percentage of real estate buyers in 2022

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First-time buyers made up the largest percentage of property buyers last year, despite the rising cost of borrowing and the cost of living hitting their finances hard.

According to the Yorkshire Building Society, first-time buyers made up 53% of mortgage purchases. This is an increase from 50% in 2021 and 41% ten years ago. Previous data showed that the proportion of first-time buyers with a mortgage last reached 53 percent in 1995.

But overall first-time buyers fell 9 percent as borrowing costs skyrocketed and low-deposit mortgages disappeared from the market.

The Yorkshire Building Society estimated that the number of first-time buyers fell to 370,287 last year, down from 405,320 in 2021. These levels were particularly high as a result of the temporary reduction in stamp duty.

Demand from new buyers has increased by around 5 percent compared to 2019 levels before the pandemic. The last time the number of first-time buyers exceeded 400,000 was in 2006.

The figures are based on UK Finance data and the mutual’s own estimates.

There is continued interest from new buyers despite buyers facing higher borrowing costs and unaffordable prices. Fixed mortgage costs hit a 14-year high in October, after a mini-budget forced a sharp rise in borrowing costs but began to stabilize before Christmas.

Figures from the Resolution Foundation released in November showed that the total cost of taking out a mortgage is now higher than at any time since 1974. The typical cost of a first home rose by 10 per cent, or £25,621, to £272,500 last year. .

The threat of house prices falling in 2023 also means borrowers who took out a low-deposit mortgage to buy a property last year could find themselves in negative equity, meaning they have borrowed more than their home is worth .

Nitesh Patel, an economist at the Yorkshire Building Society, said 2022 started off well in terms of new mortgage deals before slowing down as economic uncertainty caused consumers to tighten their belts.

He said: “Demand from first-time buyers remains strong, even with house prices at historic highs for much of the year, and the country is experiencing such political and economic uncertainty.”

He added that economic uncertainty and rising borrowing costs could “prevent potential borrowers from making such a significant purchase or cause lenders to tighten affordability”, leading to a further decline in first-time buyers in 2023.

Figures from Aviva, published in November, estimated that one million people under the age of 45 have ruled out buying a property amid pressures from the cost of living crisis.

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