First time buyers in 2012 at the highest level for five years

12th February 2013



There are signs of a recovery in the mortgage market as the number of first time buyers has reached its largest yearly total in five years in 2012 according to figures from the lenders’ trade body the Council of Mortgage Lenders.

A total of 216,200 first time buyers became homeowners in 2012. This is the first time that the annual total has exceeded 200,000 since 2007. It is also 12 per cent cent higher than in 2011 when 193,000 loans were made to first time buyers.

The CML says a total of 19,100 loans were advanced to first-time buyers in December. This was a 12 per cent drop compared with November but it was nevertheless up by 3% on the same period in 2011. By value, loans to first-time buyers totalled £2.4 million, a 11 per cent fall on the previous month.

The fourth quarter total – which, the CML says is less affected by “noise and seasonal trends” than the monthly figures – showed that lending to first-time buyers continued to strengthen. There were 60,500 loans advanced in the last quarter of 2012, worth £7.6 billion, an 8 per cent increase from the third quarter and up by 14 per cent compared to the fourth quarter of 2011.

In the fourth quarter, first-time buyers also accounted for 42 per cent of all house purchase lending.

The trade body also says there was a “modest but discernible” increase in lending at higher loan-to-value ratios in the last quarter i.e. for a larger proportion of the value of the property.

While the average loan-to-value ratio stayed at 80 per cent, where it has been for two years, the CML says this masks some encouraging movement in higher loan-to-value lending. For example, 1 in 40 first-time buyers took out a 95 per cent mortgage compared with less than 1 in 100 a year earlier. And around 1 in 5 first-time buyers borrowed 90 per cent or more.

Table 1: First-time buyers, lending and affordability

Number of loans Value of loans £m Average loan to value Average income multiple Proportion of income spent on interest payments Proportion of income spent on capital and interest payments

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