First-time buyers returning to housing market

FIRST-TIME buyer numbers are up by almost a quarter year-on-year, lenders said yesterday, amid signs that government efforts to encourage mortgage lending are trickling down to people with smaller deposits.

A total of 21,700 loans worth £2.7 billion were made to first-time buyers in November, one of the highest monthly totals in the last three years, the Council of Mortgage Lenders (CML) said.

These figures mean that first-time buyer numbers were up by 24 per cent compared with a year earlier, and increased by 8 per cent month on month.

The uplift, along with increased activity among home movers, contributed to a 6 per cent rise in the number of loans for house purchase in November – and year-on-year increases in activity are likely to continue, the CML said.

For the second month in a row, first-time buyer loans accounted for 41 per cent of all house purchase loans, compared with the longer-term average of 38 per cent.

The only month when first-time buyer numbers have been higher since the end of 2009 was in March last year, when there were just over 24,000 loans, as first-time buyers rushed to complete deals before the end of a stamp duty concession, the CML said.

Its latest figures provide evidence that a multi-billion-pound government scheme to boost lending which was launched in August is giving people with lower deposits a helping hand on to the property ladder.

Lenders have been slashing their rates since the Funding for Lending Scheme started and mortgage availability has also increased, but there have been concerns that many of the ost competitive rates have been aimed at people with bigger deposits.

The CML’s figures also showed that despite the increased activity, first-time buyers still typically need to put down a 20 per cent deposit to buy a home – nchanged from a year earlier.

CML director-general Paul Smee said: “Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending, suggesting that the underlying trend for year-on-year increases should continue.

“We expect the Funding for Lending Scheme to continue to encourage a downward drift in interest rates.”

The CML’s latest figures also showed that a total of 31,100 loans worth £5bn were advanced to home movers in November, representing a 5 per cent month-on-month increase and a 6 per cent annual uplift.

The typical percentage of home movers’ incomes spent on mortgage payments fell slightly month on month to 19.1 per cent, although this is still slightly higher than a year earlier.

However, remortgaging levels remained sluggish, the CML said, with £3.2bn advanced in remortgage loans in November, down from £3.5bn the previous month.