The threat of a rise in borrowing costs led first-time buyers to look through increased deposit costs and indulge in a "summer of white-hot activity" with completed transactions hitting a pre-recession high.
Monthly first-time buyer sales rose 4.9 per cent to 29,700 in the month to July, according to an index by estate agents Your Move and Reeds Rain. This was the highest since August 2007, when there were 35,300 completed transactions recorded.
This came despite the average first-time buyer deposit rising by 10 per cent to £27,975 in the year to July, an increase of £2,546 in cash terms. The cost of a deposit as a proportion of a first-time buyer’s average income rose 5.4 percentage points to 71.6 per cent during this period.
Last month, Bank of England governor Mark Carney said the decision about when to raise the main interest rate from its current all-time low of 0.5 per cent would come into sharper focus around the turn of this year. This reverberated through the property market as people rushed to buy homes and lock in low mortgage rates.
"This month’s particularly high transaction rate is also partially due to expectations that the Bank of England may announce a rate rise," Adrian Gill, director of Your Move and Reeds Rains, said.
"The thought of months of rock-bottom mortgage rates being brought to an end is encouraging many wavering first-time buyers to jump on the property ladder before repayment costs shoot up."
"Some may have held back briefly when considering the rising deposit costs. But real wages have been growing too, and first-time buyers are able to shoulder the short-term burden of a slightly higher deposit to spare the risk of losing out on a good mortgage deal."