First-time buyer affordability bounces back in February

Jake Carter

March 11, 2021

residential first homes

The average maximum loan available to first-time buyers rose in February, according to the latest MBT Affordability Index.

The average maximum loan available to FTBs rose to £237,500 in February, from its record low of £230,555 in January.

However, it still remains nearly 8% down compared to February last year, when the average maximum loan available was £256,915.

As well as this, the number of lenders active in the FTB market has increased, the index shows.

According to the data, there was at least one lender able to meet the loan requirements of 86% of FTBs in February this year, representing the highest level on record.

The same figure was 71% in February 2020 and it slumped to a low last May when there was an affordable option for just 59% of FTBs.

Tanya Toumadj, chief executive at Mortgage Broker Tools, said: “First-time buyers have had reason to be cheerful in recent weeks and the launch of the Mortgage Guarantee Scheme will open up new options for potential buyers who have only a small deposit.

“However, it’s important to remember that any buyers hoping to borrow 95% LTV under the scheme will need to demonstrate that they can afford the loan and so the state of the affordability landscape will play a big role in the success of the initiative.

“This is something that we’ll be monitoring closely with the MBT Affordability Index over the coming months.

“The good news is that the average maximum loan sizes available to FTBs bounced back in February, from their record low in January.

“It is still harder for borrowers to access larger loan sizes than it was this time last year but, with more lenders focusing on this space, there are more options for those hopeful to take a first step onto the property ladder.

“According to analysis of cases processed through MBT Affordability, there’s at least one affordable option available for 86% of First Time Buyers.

“This shows that the ability to quickly and accurately research the whole market enables brokers to access a solution that meets the lending requirements of the vast majority of their clients.”

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