Housing market activity is increasingly shifting towards first-time buyers, away from buy-to-let and cash, according to UK Finance.

What’s the latest?

Mortgage lending was subdued in August but first-time buyers continued to make the most of opportunities to get on to the property ladder.

A total of £24.2bn was advanced by all lenders during the month, in line with monthly lending figures for most of 2017, once seasonal factors were taken into account.

Mortgage approvals for house purchases totalled 41,807 in August, also broadly unchanged from the previous six months, according to UK Finance.

But first-time buyers continued to take advantage of the lack of activity by other groups, with a 17% jump in the number of people buying their first home compared with two years earlier.

Going forward, UK Finance said it expected lending growth to be dampened by a potentially more challenging economic outlook.Above: Priced at £275,000, this one-bedroom flat in Hertford, near the River Lea in Hertfordshire, is in close proximity to the Hertford East railway station

Why is this happening?

Housing market activity has been increasing modestly since the start of the year, but the mix of purchasers had shifted towards first-time buyers and away from buy-to-let investors, UK Finance said.

It added that there was also some evidence of rebalancing across the regions, with activity picking up in the north of England, Wales and Scotland, while it was more subdued in the less affordable regions of London, the south east and East Anglia.

Who does it affect?

There has been a significant shift in who has been driving activity in the housing market during the past year.

Purchases by buy-to-let investors were 31% lower in July than they had been two years earlier, as a raft of tax changes have made the sector less profitable.

This void has been filled by first-time buyers, who traditionally buy the same types of properties as investors.

A total of 356,000 first-time buyers bought a home in the year to the end of July, 17% more than two years earlier, and only slightly below the figure of 361,000 for home-movers during the same period.Above: Listed on Zoopla, this one-bedroom maisonette in Didcot, Oxfordshire, is available for £189,950 and could make an ideal first-time purchase

Sounds interesting. What’s the background?

First-time buyers are not only benefitting from a fall in competition from investors, but they have also received support from a number of government schemes.

The Help to Buy scheme enables people to acquire a property with just a 5% deposit, while the Starter Home initiative enables first-time buyers to purchase somewhere for below the market rate.

The Government has also introduced the Help to Buy ISA, whereby it tops up the savings of those setting aside money for a house deposit by 25%, or up to £3,000.

Mortgage lenders have also become more open to lending to first-time buyers.

There are currently a record number of 90% loan-to-value mortgages on offer, with 275 different deals available.

The average rate being charged on the loans has also fallen steeply to just 2.63%, down from 3.35% in September 2015 and 5.47% in September 2012.Above: The selling agent describes this two-bedroom mid-terraced home in Sevenoaks, Kent, on the market for £305,000, as the ‘perfect first-time buyer property’

Top 3 takeaways

  • Mortgage lending was subdued in August but first-time buyers continued to get on to the property ladder
  • A total of £24.2bn was advanced by all lenders during the month, in line with monthly lending figures for most of 2017
  • Mortgage approvals for house purchase totalled 41,807 in August, in line with the previous six months

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