The MAB research shows that 40% of UK adults are planning to buy their first home, move house or remortgage before the end of 2016 when the Help to Buy scheme is due to finish.
Also, some 12% are actively seeking a new mortgage deal within the next 12 with many attracted by increasing options for buyers with low deposits. Of those seeking a mortgage within the next year, half are looking to buy a first home while 35% plan to move house. The remaining 15% want to remortgage an existing home.
Some 26% of active mortgage seekers can only afford a 5% deposit, emphasising the importance of greater lending in the 95% loan to value (LTV) range as promoted by the Help to Buy mortgage guarantee.
Just 20% can put down a deposit of more than 20%, while the majority, 61%, are looking for deals with a maximum deposit of 10%.
The research also shows that the typical income of mortgage seekers is £32,313, marginally lower than the average income of first time buyers since 2009 which the Council of Mortgage Lenders puts at £33,485.
The MAB says that this suggests the return of 95% lending is beginning to release pent up demand and also attracting borrowers with the means to manage their mortgage payments once they overcome the initial deposit hurdle.
It also reveals that 32% of people seeking a mortgage in the next year can afford to buy or move without outside help, underlining the value of government support for aspiring home buyers.
It points out that Help to Buy has eased the burden on the so called Bank of Mum and Dad and offered new hope to those whose relatives cannot boost their deposits. Among active mortgage seekers, 28% can only afford to buy or move with government help while 26% are relying on financial help from family.
Across all existing home owners, 15% struggled to save a big enough deposit to get a mortgage for their current home. Despite better market conditions for first time buyers in the past, some 9% still wish Help to Buy had existed when they bought their first home.
Nearly one in five homeowners over the age of 40 relied on a mortgage of 95% or more to buy their first home. Among younger home owners aged below 40, almost one in three relied on financial help from friends and family to buy their first home.
‘People are fast realising the wind is blowing in their favour when it comes to joining or moving up the property ladder. Help to Buy has supported efforts to make mortgages more accessible to first time buyers and existing home owners, with more lenders and products set to drive up competition in the new year,’ said Brian Murphy, head of lending at the Mortgage Advice Bureau.
‘Buyers are voting with their feet and we are seeing great enthusiasm for low deposit mortgages. The type of 95% mortgages encouraged by Help to Buy are familiar products and part of what’s needed in a healthy market to cater for the full range of buyer needs,’ he explained.
He pointed out that helping remove the need for hefty deposits is where government support has really come into its own. ‘Some lenders have joined the official scheme while others are offering 95% mortgages on their own. Either way, the end result for home buyers is better access to mortgages they can realistically afford,’ he said.
‘Lenders are being careful to lend responsibly, with affordability checks in place to protect borrowers against future rate rises. Government help means the Bank of Mum and Dad can take a well earned break with affordable mortgages in better supply,’ he added.
