Number of first time buyers hits 5-year peak
Published by Max Salsbury for 24dash.com in Housing and also in Finance
The number of first time buyers reached its largest yearly total in five years in 2012, according to new data released today by the Council of Mortgage Lenders.
A total of 216,200 FTBs became homeowners last year.
This is the first time the annual total has exceeded 200,000 since 2007, and represents a year-on-year rise of 12 percent on 2011 when 193,000 loans were advanced.
The CML's data comes on the day that is was revealed that FTBs are facing 10 years of saving to get enough for a deposit on their first home.
On a monthly basis, lending to FTBs, home movers and remortgage lending all eased in December, reflecting the usual seasonal factors.
A total of 19,100 loans were advanced to FTBs in December, a 12 percent drop compared to November but up by three percent on the same period in 2011.
By value, loans to FTBs totalled £2.4 million, an 11 percent fall on the previous month.
The fourth quarter total - which 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 eight percent increase from the third quarter and up by 14 percent compared to the fourth quarter of 2011.
In the fourth quarter, FTBs also accounted for 42 percent of all house purchase lending, above the 38 percent typically seen.
There was also a modest but discernible increase in lending at higher loan-to-value ratios in the last quarter.
CML's director general, Paul Smee, said: "Despite the seasonal dip in lending that we normally see in December, the underlying trend for year-on-year increases in house purchase activity continued in 2012.
"FTBs, in particular, have benefitted from the effects of better funding conditions and the Funding for Lending scheme, with the number of new people moving into home-ownership in 2012 reaching the highest level for five years. This, along with other factors, confirms that lenders really are open for business."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It is not too early to call the end of the mortgage impasse. The Funding for Lending scheme is making more money available at cheaper rates to lenders, which is being passed onto borrowers, resulting in some of the cheapest mortgage rates ever seen.
"It really has become a case of 'how low can they go?' as the mortgage price war continues to rage, even though Base Rate remains static. Two-year fixed rates are now available from 1.89 percent, while five-year fixes are pegged as low as 2.69 percent. Borrowers need to watch out for some hefty fees on the cheapest rates, while these are only available to those with big deposits.
"However, the cost of borrowing has dropped across the market, with rates on higher loan-to-values also falling. This is being reflected in the growing number of first-time buyers, which is significant for the health of the housing market as they really are its lifeblood. One in five first-time buyers is borrowing at least 90 percent LTV and with these rates falling along with lower LTV rates, this will fuel further growth.
"Most importantly for a market that rests on confidence, there is renewed optimism. Let's not get ahead of ourselves: the mortgage market is still constrained when you compare it with what it was at the height of the housing boom but it is finally showing encouraging signs of improvement."