First Time Buyer Numbers Leap.

by Mark Johnston

First Time Buyer Numbers Leap.

Lenders are it seems coming out of their shells once again and beginning to support first time buyers as they become more confident about their credit supplies and the state of their balance sheets.

The Council of Mortgage Lenders (CML) has stated that the number of first time buyers taking on mortgages leapt by 20 per cent in March this year, fuelled by the bank of England’s funding for lending scheme.

Recent figures show that a total of 19,100 home loans worth around £2.4 billion was advanced to new buyers during March, this figure was up from the previous month when just 15,900 new loans were advanced.

Data also shows that first time buyers accounted for at least 45 per cent of all house purchases in March and this is up from 43 per cent in February.

Some surveyors have suggested that schemes such as the help to buy scheme and also the announcement of the extension of the funding for lending scheme are now leading to increased demand for property which in turn could mean an increase in lending in the coming months.

The Royal Institution of Chartered Surveyors (RICS) state that the demand for residential property has not been at its current level since November 2009, with new buyer inquiries rising at the fastest rate for 3 years.

Treasury chief secretary, Danny Alexander, says “the increase in first time buyers taking out loans shows the governments housing policies are having the desired effect”.

Therefore there are signs that the funding for lending scheme in particular have prompted stronger competition among lenders to attract first time buyers, especially with the launch of some innovative low deposit deals.

Paul Smee, director general of the Council of Mortgage Lenders (CML), said that “borrowers, even those with out a large deposit, are increasingly able to get a foot on the property ladder”.

So it appears that first time buyers are now being tempted back in to the market as many lenders have cut their rates even on higher loan to value (LTV) deals.

In the first quarter of this year one in four first time buyers put down at least a 10 per cent deposit which is up from the one in five recorded in the first quarter of 2012.

Richard Sexton, director of chartered surveyors E.surv, suggested that “these figures were the most encouraging signs yet of a genuine recovery in the housing market”.

However, it is also worth noting that these figures are 21 per cent down on March 2012, but March last year did mark the end of the stamp duty holiday and this therefore caused a flurry of activity in the market as many buyers rushed to avoid the tax.

Other data also reveals that first time buyer activity in the first quarter of 2013 was low with just 50,900 mortgages advanced compared with the sametime last year when 51,200 mortgages were advanced.

Despite all these recent figures around first time buyer activity in the housing market, it still seems that many first time buyers will continue to rent as house prices remain out of reach.



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