First Time Buyer Numbers Increase!

by Mark Johnston

First Time Buyer Numbers Increase!

Improvements to the housing market such as the launch of the Governments funding for lending scheme has meant that mortgage rates have been slashed to some of the lowest levels ever seen and on top of this lenders have also reported that their ‘risk appetite’ is slowly returning.

It therefore seems that these particular improvements have helped to encourage first time buyers to once again return to the housing market.   

first time buyers 2The Halifax, for instance, has estimated that there were 120,000 first time buyers in the first six months of 2013, showing an increase of almost one fifth year on year and marking the biggest number since there were 181,500 buyers from this sector in the first half of 2007.

The increase in first-time buyer numbers may also be down to an increasing number of high loan to value (LTV) mortgages that now appear to be coming on to the market.

This recent data continues the trend seen last year when there was a 13 per cent increase in the number of first time buyers between 2011 and 2012.

Reports also reveal that first time buyer numbers rose by more than the total number of house purchasers, increasing their share of the home purchase market from 40 per cent in the first half of 2012 to 44 per cent in the same period this year. This was the highest proportion since 2000.

Craig McKinlay, mortgages director at the Halifax states “the significant increase in first time buyers is encouraging, although the number of those buying their first home still remains low by recent historical standards.”

The Council of Mortgage Lenders (CML) director general Paul Smee also added that “there has been encouraging activity in the first time buyer sector.”

The number of new buyers registering with estate agents also rose by 1 per cent in July this year.

New research also shows that house prices paid by first time buyers are still above the long term average when compared with average earnings.

Statistics show that the average house price paid by a first time buyer was 4.26 times their annual earnings, well above an average of 3.23 over the last 30 years. Buyers in this sector are 30 years old on average, up from 29 in 2011.

Some 51 per cent of all first time buyer purchases in the first half of 2013 were above the £125,000 stamp duty threshold. This is up from 44 per cent a year earlier and this has meant that more first time buyers are now paying stamp duty.

This all said it does continue to be difficult for people to save up a big enough deposit. The average first time buyer deposit currently stands at 18 per cent.

Current figures show that first time buyer deposits across the country stand at around £26,859.

However, once first time buyers have managed to make the jump on to the property ladder, mortgage repayments have become more affordable as a proportion of income. The proportion of disposable earnings they typically need to put towards mortgage payments has dropped to 27 per cent.



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