First-time buyer lending up
Lending to first-timers increased by almost a fifth on the previous year despite a continued demand for large deposits.
There were 20,000 loans to first-time buyers in October, worth a total of £2.5bn compared to £2.1bn in October 2011, according to data released by the Council of Mortgage Lenders (CML).
While first-time buyers accounted for 40% of house purchase loans, the average loan-to-value ratio on their mortgages remained static at 80%.
Moneysprite director Ashley Brown said the data was encouraging: “What’s interesting is that loans advanced to first time buyers have increased despite the average loan-to-value remaining static at 80%.
“The problem for first-time buyers has been how to cobble enough money together for a deposit, but these figures suggest they are finding a way to boost their deposit funds, despite having to meet higher living costs.”
Despite a slight rise in October compared to the previous month, the number of remortgages issued was 14% lower than the same time in the previous year. The shift in lending from remortgages was also evident in Tuesday’s lending figures from the Financial Services Authority.
The figures indicated a modest year-on-year growth in lending for house purchase, CML director Paul Smee suggested.
However, SPF Private Clients chief executive Mark Harris said for first-time buyers a 20% deposit could be ‘an impossible ask’ without help from parents.
“’The mortgage market is still constrained but is showing signs of easing. The Funding for Lending scheme continues to progress but it is a slow burner,” he said.
“We expect to see more lenders start reducing rates in the New Year as these funds filter through with better rates at high LTVs providing a further boost the number of first-time buyers.”