First-time buyers hit two-year high

Nia Williams

February 12, 2010

The CML has also published new analysis showing how affordability, especially for first-time buyers, is complicated by the effect of low interest rates when capital repayments are taken into account.

December saw 24,900 loans to first-time buyers, the highest number since November 2007. At £2.9 billion, first-time buyer loans rose 26% from November both by volume and value.

55% of house purchase loans were on properties costing under £175,000 and therefore exempt from stamp duty, up from 51% in November. 10,300 first-time buyers and 11,200 home movers bought a property of between £125,000 and £175,000 in December, up 63% from 6,300 and 49% from 7,500 respectively from November. This clearly indicates a rush to complete purchases before January, when stamp duty would have added an additional 1% of the purchase price onto the transaction costs.

House purchase lending in general totalled 63,000 loans worth £8.5 billion in December, up from 51,000 (£7.1 billion) in November and from 33,000 (£4.4 billion) in December 08. The number of loans for remortgage stayed the same as November at 28,000, with the value falling from £3.5 billion to £3.4 billion, and was down from 41,000 transactions (£5.7 billion) in December 2008.

Because of the unprecedentedly low volume of transactions in the early months of the year, 2009 was very weak overall. Total lending was £143.6 billion, down 43% from £254.1 billion in 2008 and down 60% from the highest number on record of £362.6 billion in 2007.

The total number of house purchase loans for the year was 517,000, fractionally up from 516,200 in 2008 but just over half of the pre credit crunch level in 2007 of 1,015,100. First-time buyer loans accounted for 198,200 of these, up slightly from 193,700 in 2008 but down 44% from 357,100 in 2007. There were also 318,700 home mover loans in 2009, down slightly from 322,500 in 2008 but down 52% from 657,800 in 2007.

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