Posted on July 12th, 2013 | Categories - News
The latest figures from the Council of Mortgage Lenders (CML), have shown a 42% rise in the number of first time buyers, compared to 12 months ago.
Lending to home movers and people remortgaging their property also rose, but the increase in number of first time buyers, who are so vital to the housing market, is particularly significant.
Spurred on by government incentives such as Help to Buy and the Funding for Lending scheme, which has pushed down interest rates, 25,100 first time buyers took out a mortgage in May, up 29% on April.
The number of first time buyers in May is the highest level since 2007, before the financial crisis took hold and significantly higher than the bottom of the market in January 2009 when just 8,500 mortgages were granted to people buying their first home.
The rise in the number of first time buyers can partly be explained by the trend of lenders offering higher loan to value mortgages. The average first time buyer put down a deposit of 17% May, down from 19% in April and from 20% this time last year.
According to the CML the average first time buyer is 29 years old; much lower than other surveys have suggested.
House purchase & remortgage lending increase
It wasn’t just lending to first time buyers which rose in May.
The number of mortgages granted to home movers rose to 55,900, up by 31.2% on April and by 18.7% on the same time last year.
As existing borrowers look to take advantage of all-time low interest rates, the number of people remortgaging their home rose by 17.6% in May, compared to April. However, the number of remortgages actually dropped slightly compared to the same time last year.
Commenting on the figures, Paul Smee, Director General of the Council of Mortgage Lenders, said: “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.” (Source: Council of Mortgage Lenders)
Buy to let mortgages
The figures show that growth in the buy to let market remains strong.
Many mortgage and housing experts have expressed concerns that buy to let investors could squeeze first time buyers out of the market, as they often compete for the same property. However, Paul Smee disagrees: “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.” (Source: Council of Mortgage Lenders)