First Time Buyer Activity Increases

Date Published 30 May 2013

First-time buyer activity remained strong in March with the number of first-time buyers increasing by 20% according to data published by the Council of Mortgage Lenders.

This increase, as well as small rise in the number of home movers, contributed to a monthly jump in house purchase lending. Remortgage lending also increased compared to February but remained flat over the first quarter.

A total of 19,100 loans (worth £2.4billion) were advanced to first-time buyers in March, up from 15,900 loans in February but down on the 24,400 loans advanced in March last year. However, March 2012 marked the end of the first-time buyer stamp duty holiday and resulted in a significant jump in activity, making meaningful year-on-year comparisons difficult.

While the loan-to-value ratio for first-time buyers remained at 80%, there has been a gradual increase in the proportion of first-time buyers taking out loans with a deposit of 10% or less. In the first quarter of the year 1 in 4 first-time buyers put down a deposit at 10% or less – up from 1 in 5 in the first quarter of last year. First-time buyers also typically borrowed a slightly larger amount in March than in February, both in absolute terms and relative to their income.

First-time buyers also continued to account for an increasing proportion of all house purchase loans – increasing to 45% in March from 43% in February.

A total of 42,000 house purchase loans were advanced in March (worth £6.2billion) marking a 15% rise on February lending. As expected, house purchase lending in March was down (19%) on March 2012 but this was again due to distortions around the end of the stamp duty concession in March 2012.

CML Director General Paul Smee said: `First-time buyer activity in the first quarter was nearly at the same level as last year – when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.

`More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years – a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.`