First-time buyers rise 20pc

Robyn Hall

May 14, 2013

Loan advances to first-time buyers rose from 15,900 in February to 19,100 in March but fell from 24,400 loans advanced in March last year which marked the end of the stamp duty holiday, making meaningful comparisons difficult.

CML director general Paul Smee said: “First-time buyer activity in the first quarter was nearly at the same level as last year when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.”

This increase, as well as small rise in the number of home movers, contributed to a monthly jump in house purchase lending. Remortgage lending also increased compared to February but remained flat over the first quarter.

Despite the spike in March last year first-time buyer lending activity over the first quarter of 2013 fell only marginally shy of activity in the first three months of 2012.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “First quarter activity has held up remarkably well given last year’s added incentive of the stamp duty holiday. Without this extra boost this year’s comparatively healthy figures are an encouraging sign of the improving market for first-time buyers in 2013.”

Overall 50,900 loans were advanced to first-time buyers in the first quarter of this year compared to 51,200 loans in the first quarter of 2012.

While the loan to value ratio for first-time buyers remained at 80% there has been a gradual increase in the proportion of them taking out loans with a deposit of 10% or less. In the first quarter of the year one in four first-time buyers put down a deposit at 10% or less, up from one in five in the first quarter of last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The mortgage market continues to prosper. Those all-important first-time buyers are returning to the market with a 20% jump in their numbers compared with February. This is crucial to the overall health of the housing market and with the extension of Funding for Lending to January 2015 we should see more higher loan-to-value deals to temp those with modest deposits.”

First-time buyers also typically borrowed a slightly larger amount in March than in February both in absolute terms and relative to their income.

And first-time buyers also continued to account for an increasing proportion of all house purchase loans, increasing to 45% in March from 43% in February.

Ashley Brown, director of the independent mortgage broker Moneysprite, added: “This rise in first-time buyer activity we’re seeing is not just because there’s a larger number of mortgage deals on the table at the 90% plus LTV level it’s the fact that they’re affordable again as a genuine price war gets underway.”

And Sophie Hall, head of intermediary at Avelo, said: “It’s not yet full steam ahead for the mortgage market, but it is certainly picking up speed. Banks and building societies are passing on the benefits of cheap finance from the Funding for Lending Scheme, and the pool of products for those without colossal deposits is deepening – albeit steadily.

“But the biggest factor in strengthening activity has been the renewed confidence of the man on the street. With the UK avoiding a triple dip, and house prices climbing, homebuyer demand is hardening. As a result, many brokers are seeing business pick up and are increasingly optimistic over the prospects of the market. These figures will confirm it is not just buy-to-let market that is on track for growth as the year progresses.”

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