First time buyer numbers jump 42 per cent in a year

12th July 2013

The number of first-time buyers coming to the market has jumped by 42 per cent in the past year writes Philip Scott. Lending to first-time buyers, home movers and re-mortgagers all increased in May, with a particularly marked increase in lending to first-time buyers, according to the latest data published by trade body, the Council of Mortgage Lenders.

The number of mortgages to first-time buyers in May reached 25,100 – 29 per cent higher than in April, and 42 per cent higher than in May last year. First-time buyers accounted for 45 per cent of all loans for house purchase, similar to the levels of the past few months but considerably higher than the 38 per cent seen on average since 2007.

The number of first-time buyer loans was the highest monthly figure since late 2007, and a marked contrast to the low point of just 8,500 loans in January 2009. By value, first-time buyer lending reached £3.4bn in May, up from £2.5bn in April and £2.2bn in May last year.

For some months, there has been an increase in the number of first-time buyers entering the market with smaller deposits – this has now resulted in a shift in the average first-time buyer loan-to-value ratio rising to 83 per cent, up from 81 per cent in April and the highest ratio since November 2008.

The research found that first-time buyers are also typically borrowing more – £113,400 in May, on average, compared with £110,000 in April and £105,000 in May last year – and generally now have higher incomes; £35,700 in May, up from £33,500 last year. The age of the typical first-time buyer remained at 29.

Paul Smee, director general of the Council of Mortgage Lenders, says: “Although monthly lending is still running at far less than half its typical monthly level during the peak, there is no doubt that the mortgage market is firmly open for business. Both the borrowing appetite of first-time buyers, and the availability of attractive mortgages for them, have improved markedly since a year ago.

“What is interesting is that, in contrast to some recent assertions, this is happening in parallel with the strengthening buy-to-let market. It is perfectly possible for both the buy-to-let market and the first-time buyer market to improve at the same time, as the evidence clearly demonstrates. It is important that the supply of housing steps up, as increased housing supply is a crucial factor in ensuring that housing is affordable over the long term.”

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