. . . But Connells insist FTB activity soars to three-year high

First-time buyer activity hit its highest level last month since March 2009, according to a new activity report from Connells Survey and Valuation.

The firm, which does not say how much of the activity converted into actual mortgages, says the total number of residential valuations it conducted during February was nearly a third (31%) more than a year ago, and up 43% on January.

It says increased demand from first-time buyers was a key factor in the growth in activity.

The number of valuations for potential first-time buyers rose by 52% compared to February 2011, and was a 56% increase compared to January.

As a result, first-time buyer demand accounted for 35% of all valuations completed.

John Bagshaw, of Connells Survey and Valuation, said: “There’s no doubt that the imminent deadline for the Stamp Duty holiday exemption has been a catalyst for first-time buyer activity.

“Many first-time buyers are now feeling a real sense of urgency, and this has boosted overall mortgage market activity in the last month. But the first-time buyer demand has also been supported by stronger lending figures at the lower end of the market, not to mention mortgage affordability.

“If this trend continues into the spring, the improvement should help soften the blow of the end of the Stamp Duty holiday in the longer term.”   
 
The buy-to-let market continued to expand in February, with 38% more valuations conducted by Connells for property investors than in January. The figure was up 50% on a year ago. 
 
Valuation activity from owner occupiers moving home increased more steadily on an annual basis, with the number of valuations conducted up nearly one fifth (17%) compared to February 2011. However, says Connells, this represented a larger than usual seasonal increase of 51% compared to January, as growing first-time buyer activity freed up property chains. 
 
The remortgage market also grew in February, with remortgage valuations rising by 18% compared to February 2011 – a monthly increase of 21%.  
 
Bagshaw said: “Remortgage activity has shown consistent annual growth in the past few months, despite the distant prospect of the MPC hiking interest rates.

“However, the recent announcement by Halifax that it is increasing its Standard Variable Rate is likely to spark a surge in remortgaging activity. If more lenders join Halifax in raising rates, we may see the remortgaging market kick-up a gear in coming months as borrowers look to lock-in to favourable long-term fixed or tracker rates.”