First-time buyers driving mortgage demand as costs trickle down, Skipton says

Building society and property group Skipton has ramped up the amount it lent to first-time homebuyers, who it said are driving demand for mortgages, despite facing elevated borrowing costs.

It also said more savers were shopping around for better rates and locking away their money into ISAs.

Skipton, which includes the building society and estate agency Connells Group, reported higher earnings and a growing mortgage book.

Mortgage lending jumped by more than a 10th to £30 billion in the first six months of the year, compared with the same period in 2023.

First-time buyers made up 41% of all new loans, compared with less than a third last year.

Skipton said that despite predictions that the mortgage market would slow this year, 2024 has been “encouragingly buoyant so far”.

The volume of applications for mortgages has grown, and the building society said first-time homebuyers were driving the highest proportion of demand.

That is despite mortgage costs remaining elevated thanks to UK interest rates at the highest levels since the financial crisis in 2008.

But Skipton said that, with inflation falling and interest rates likely to come down, mortgage costs have started to ease, with the average market rate for a five-year mortgage now at just under 5%.

On Thursday, the Bank of England cut interest rates to 5% from 5.25%, the first time they have been reduced since 2020.

Stuart Haire, Skipton’s chief executive, said the group will be an “advocate for change” in the UK housing market and financial services industry.

“We recognise the role we have as Skipton Group to enable us to become a well-known voice campaigning on socially important matters, such as affordable housing,” he said.

Meanwhile, the building society said that its total savings balances jumped by  17% year on year to nearly £28 billion.

This was bolstered by popularity for ISAs as people looked to make tax-efficient savings.

Skipton said it expects to see “a lot of savers shopping around for the best rates”, with a large amount of savings rates expiring in the second half of the year.

Lower easy-access rates on the market could also see more people choosing to lock away their money into longer-term savings accounts.

Data from the group’s estate agency arm also showed signs of momentum in the housing market, which has faced a period of slower demand as a result of higher mortgage costs and squeezed supply of houses.

It showed that property listings and viewings rose by 15% in June, compared with the same month last year, and the number of properties available to rent surged by a quarter.

Across the group, its pre-tax profit edged up by 5% to £157 million over the first half of the year.