First-time buyer lending increased in Q3

Nia Williams

November 12, 2012

Overall house purchase lending in Q3 rose by 13% to 146,500 house purchase loans advanced.

However on a monthly basis September saw substantially lower house purchase lending than August with 44,400 loans advanced in September compared to 53,900 in the previous month and 48,800 loans in September last year.

Similarly lending to first-time buyers fell by 14% in September compared to August and by 3.2% compared to September last year.

This meant there was a decrease in loans to first-time buyers of 17,900 (worth £2.3 billion) compared to 20,700 loans advanced in August.

Of these 53% were sold via an intermediary, down from 55% in the previous quarter.

Paul Smee, the director general of The Council of Mortgage Lenders, said: “While lending in September was slow after a particularly strong August quarterly figures suggest that the underlying picture is more positive.

“An increase in house purchase approvals indicated by the Bank of England in September suggests that we may see a return to growth in coming months but it may take some time before a boost from the Funding for Lending scheme is reflected in house purchase completions.”


The average loan to value ratio remained unchanged for first-time buyers in September at 80% while loans to first-time buyers accounted for 40% of all house purchase loans.

This was a higher proportion than the previous two months reflecting the larger decline in the number of loans to home movers which fell by 20% compared to August and by 13% on the same period last year.

Home movers accounted for 26,500 loans worth £4.5 billion in September falling from 33,200 loans in August – the highest figure in over two years.


Remortgage lending continued to trend below levels seen earlier in the year; there was a monthly rise in September when a total of 24,600 loans (worth £3.3 billion) were advanced for remortgaging up from 23,100 loans in August. This was still 25% lower by value than September last year.

Despite this increase in September, remortgage lending fell in the third quarter overall. It was 7% lower in the third quarter and 24% down on the same period last year. £9.7 billion was advanced to borrowers remortgaging in the latest quarter down from £12.7 billion in the third quarter last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Monthly fluctuations in lending volumes make it difficult to get a clear picture of what is happening in the market so the quarterly statistics are much more useful painting a more positive picture.

“The mortgage market is still constrained but is showing signs of easing. Money market rates are falling as the Funding for Lending scheme continues to have an impact on pricing.

Harris added: “Rock-bottom mortgage rates continue to be available to those with the biggest deposits or similar levels of equity in their homes. But we are also starting to see better rates filter through for those with more modest deposits such as the Co-operative Bank’s two-year fix pegged at 3.99% for those with just a 10% down payment and no fee.

“While this is still a significant premium of 2% on Tesco’s 1.99% two-year fix which you could get if you had a 40% deposit, a high LTV product starting with a three is a significant development which we welcome.

“It is encouraging that we are seeing an increase in the number of first-time buyers although an average deposit of 20% is still required. Better rates at higher LTVs would help boost these numbers and make it easier for first-time buyers to get on the housing ladder.”

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