by Mark Johnston
Mortgage Lending to First Time Buyers!
It appears that the property market has once again burst in to life with young buyers desperate to realise their home owning dream now is the time to take the plunge.
Recent studies show that the number of first time buyers who have been given mortgages are back up to the levels seen before the bank crash of 2007.
New figures reveal lending to first time buyers has hit its largest quarterly total since 2007 with 68,200 purchasing their first home in the second quarter of 2013.
According to the Council of Mortgage Lenders (CML) some 25,300 mortgages were advanced to first time buyers in June, up from 19,400 in the same month last year.
This took the total for the three months to the end of June to 68,500, which was the highest level in more than five years.
Analysis of the mortgage market shows that first time buyers accounted for 46 per cent of all mortgages taken up in June, up from 44 per cent in May and significantly higher than the average 38 per cent at the height of the property boom in 2007.
Other figures reveal that the increase in first time buyer activity has led to an overall increase in house purchase lending at the expense of remortgage activity, which dipped in June.
The Royal Institution of Chartered Surveyors (RICS) adds that “the number of would be buyers looking to enter the market in July also saw the strongest growth in four years, which is a further sign that a recovery is ‘round the corner’.”
These figures seem to then highlight the continuing effect of the Bank of England backed Funding for Lending scheme which launched last August in an effort to free up mortgage lending by giving banks access to capital at ultra low interest rates, as well the Help to Buy scheme launched by the Government in April, which sees the Treasury acting as guarantor to potential homeowners.
However, the surge in the number of buyers is not matched by an increase in the supply of homes and this will therefore result in many buyers getting in to bidding wars.
Commenting on these figures, Ben Thompson, managing director of the Legal & General Mortgage Club, said: “It is clear from these figures that the market is starting to rebuild from the bottom up.”
Paul Smee, director general of the Council of Mortgage Lenders (CML), adds: “First time buyers have become a strong driver in the growth of mortgage lending this year proving that market conditions are favourable for them.”
Oliver Atkinson, director of the online estate agency Urban Sales and Lettings, suggests “If first time buyers are the engine of the housing market, the turbocharger has just kicked in.”
All in all though, young buyers are crucial for a thriving housing market, the fact is that sales to this group are the trigger for purchases all the way up the property ladder.
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