Mortgage market in Northern Ireland remains subdued but first time buyers bigger proportion than elsewhere in UK

28th May 2013

First-time buyers continued to make up a majority of the housing market in Northern Ireland, with 60% of all house purchase loans advanced to first-time buyers, according to new figures released today by the Council of Mortgage Lenders in Northern Ireland.

The CML says a total of 1,200 loans were advanced to first-time buyers in Northern Ireland, a seasonal drop of 14% compared to the fourth quarter of last year and a fall of 8% compared to the first quarter of 2012. This year.’s earlier fall is likely to be due in part to the distortion caused by the end of the stamp duty holiday in March last year says the trade body.

By value, first-time buyer lending (£90 million) in Northern Ireland fell by 10% compared to the first quarter of 2012 and by 18% compared to the fourth quarter.

The vast majority of first-time buyers in Northern Ireland continued to buy properties valued at less than £125,000. Seventy-five per cent of first-time buyers bought properties below this figure, compared to 40% in the UK, with this proportion growing in Northern Ireland from a low of 7% in the third quarter of 2007.

First-time buyers in Northern Ireland continued to borrow an average of 80% of the property’s value, on par with the UK as a whole. Other measures of first-time buyer affordability in Northern Ireland remain favourable compared to the UK, with mortgage payments consuming 17.2% of their income down from 19.1% in the fourth quarter of last year favourable compared to 19.5% in the UK overall.

Chart 1: Lending to FTBs in Northern Ireland, number of loans advanced and average LTV ratio

Source: CML regulated mortgage survey

Home movers

A total of 800 loans (worth £80m) were advanced to borrowers moving house in the first quarter, down from 900 in the first quarter of 2012 and 900 in the fourth quarter of last year.

Home movers in Northern Ireland continued to make up a significantly lower proportion of the house purchase market than the UK. Forty per cent of house purchase loans in the first quarter were to home movers, compared to 56% in the UK overall.

While steeper house price falls in Northern Ireland have helped first-time buyer activity, home movers have seen a reduction in their housing equity, decreasing the deposit available to them to put towards a higher-priced property further up the housing ladder.

Chart 2: House Purchase lending in Northern Ireland, number of loans advances, and house purchase lending in Northern Ireland as a proportion of the UK total

Source: CML regulated mortgage survey

House purchase loans

A total of 2,000 loans (worth £170 million) were advanced for house purchase in Northern Ireland in the first quarter, a 5% fall compared to 2,100 in the first quarter of last year, and a 13% fall on the fourth quarter of 2012.

Chart 3: Remortgage lending in Northern Ireland compared to the UK, yoy % change

Source: CML regulated mortgage survey

Remortgage lending

As in rest of the UK, remortgage lending remained flat in the first quarter. £90 million was advanced to borrowers remortgaging in Northern Ireland, a 36% fall compared to the first quarter of 2012 and an 18% seasonal fall on the fourth quarter of 2012.

Brian McCormick, chair of the CML in Northern Ireland says: “While the overall mortgage market in Northern Ireland continues to look fairly flat, conditions remain favourable for first-time buyers. We hope that the extension of the Funding for Lending scheme and the Help to Buy (mortgage guarantee) scheme will not only help those borrowers taking their first step on to the housing ladder, but also those looking to move home or remortgage.”

Leave a Reply

Your email address will not be published. Required fields are marked *