The latest data from Legal & General Ignite, the free mortgage research and sourcing platform, has revealed that stabilising interest rates are buoying activity in the mortgage market despite longstanding affordability concerns.
In September, searches for interest-only products saw strong gains, with first-time buyers and existing homeowners both showing high levels of engagement in the mortgage market.
First-time buyers leading market activity
Although the total volume of searches has grown month-on-month since June, the latest data indicates that activity is concentrated in specific pockets of demand. Searches for interest-only products spiked by over half (51%) in September.
In addition, the data shows that searches on behalf of borrowers exploring shared ownership options grew by just under a third (32%) last month in a reflection of both the current economic headwinds and long-term affordability concerns in the market.
Notably, first-time buyers are still leading the charge in overall activity, with the data revealing that ‘first-time buyer/first-time landlord/non-owner occupier’ was the fourth most popular search criteria used in September. Crucially, the ‘Bank of Family’ remains a dominant force in the market, with Legal & General’s ‘Bank of Family’ report also revealing earlier this year that 47% of all homes purchased by buyers under the age of 55 received help from family.
Existing homeowners remain an active but smaller portion of the market
Although a large proportion of market activity is being driven by first-time buyers, existing homeowners are also showing a healthy level of engagement. Searches on behalf of borrowers looking for second residential mortgages grew by 8% in September, while those for ‘capital-raising mortgages’ increased by 3%. In fact, ‘capital raising’ was the third most popular criteria in all searches – while some homeowners will be keen to release funds for expenses such as home renovations, others will be doing so to consolidate existing debts in the strained financial climate.
Buy to Let remains resilient despite market pressures
The latest data from Legal & General Ignite also indicates that the Buy to Let sector remains stable, with ‘first-time landlord’ recorded as the joint fourth most popular search term in September. Searches for ‘Buy to Let’ remained steady, with a marginal increase of 1% from August, while those for ‘regulated buy-to-let’ leapt by a significant 15%.
Kevin Roberts, Managing Director, Legal & General Mortgage Services, commented: “As interest rates settle into a steadier groove, it is encouraging to see a steady stream of borrowers making inroads into the property market, with the number of searches made on behalf of borrowers growing month-on-month since June. We have seen particularly high interest in shared ownership and interest-only products, a reflection of both the recent decision to maintain the base rate and longstanding affordability concerns in the market. While the Bank of Family has long been a major player in the property market, our data is also a robust reminder that family support isn’t always the only pathway to homeownership.
“Notwithstanding these positive pockets of demand, the market remains a complex puzzle to navigate for advisers, borrowers, and lenders alike. It is important that advisers continue to work on their business, as well as within it, particularly as we continue to battle economic uncertainty. For borrowers, it is crucial to remember the two key benefits of seeking guidance from a qualified mortgage adviser; access to products not available on consumer comparison websites, and the expertise gained from years of practice.”
