FTB lending surges in February
Lending to both first-time buyers and home movers surged in February with first-time buyers taking the bigger increase, figures from the Council of Mortgage Lenders reveal.
First-time buyers took out 14,100 loans worth £1.7bn, up 8% by number and 6% in value from January and up 18% by volume and 21% by value on last February.
Home movers took out 22,500 loans worth £3.7bn, an increase of 2% in volume and 3% in value from January and a 16% increase in volume and 19% increase in value from February 2011.
House purchase lending rose in February. Around 36,600 loans worth £5.4bn were taken out, up 4% by number and 2% by value from January and up 17% by number and 20% by value from February last year.
Remortgaging continued to decrease in February. Around £3.3bn was advanced during the month, a 6% fall compared to both January 2012 and February 2011.
For the first time since April 2011 there was an increase in the proportion of income first-time buyers spent on mortgage interest payments from 12.1% in January to 12.5% in February.
The CML said this was likely to reflect a combination of factors including an increase in average first-time buyer income multiples from 3.19 to 3.23 and a modest increase in some borrowing rates.
This still left mortgages for first-time buyers more affordable than as recently as 2008 when first-time buyers on average spent 19.6% of their income on mortgage interest payments.
First-time buyers borrowed on average 80% of their property's value in February, unchanged in over a year.
Since summer 2011 more than 95% of first-time buyers have taken out repayment loans and February's proportion was 96% unchanged from January.
Repayment loans to new home movers and remortgagors also increased in February from 81% to 82% for home movers and from 76% to 77% for those remortgaging.
Around 51% of first-time buyers bought properties priced between £125,000 and £250,000 in February, up from 49% in January.
February was the last full month of the stamp duty concession although next month's data is expected to bring a further rise in first-time buyer number as they moved to beat the 24 March deadline.
Paul Smee, director of the CML, said: "It is encouraging to see the continuing year-on-year improvement in house purchase lending.
"However it is not yet clear whether the end of the stamp duty concession will lead to a falling off in first-time buyer numbers and how much this may be offset by the government's NewBuy scheme."
Paul Hunt, managing director of Phoebus Software, also said that the annual increase in the value of first-time buyer lending should be treated with caution.
He said: "Stamp duty played a big role in February and March in boosting the market as first-timers scurried to complete before the end of March. LSL/Acadametrics reports that transactions rose by 32% in March, suggesting that first-timers contributed to a large spike in demand last month.
"The proof of the pudding will be when we get the numbers for April, which will show us the size of the drop off in demand now that first timers have to find larger deposits to satisfy the taxman."
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