First Time Buyer
First-time buyer numbers leap to pre-crash high
The increase meant first-time buyers accounted for almost half of all loans for house purchase that month. Total house purchase loans increased in value by a third, to £8.4bn.
CML director general Paul Smee said there was no doubt the mortgage market was open for business: “Both the borrowing appetite of first-time buyers, and the availability of attractive mortgages for them, have improved markedly since a year ago.
“What is interesting is that, in contrast to some recent assertions, this is happening in parallel with the strengthening buy-to-let market. It is perfectly possible for both the buy-to-let market and the first-time buyer market to improve at the same time, as the evidence clearly demonstrates.”
The remortgage market also saw a boost, with a 15.2% jump in remortgagors compared to the previous month and the value of remortgage loans climbing 17.6% to £4bn.
First-time buyers put down smaller deposits on their mortgages, with the average loan-to-value on these mortgages rising to 83%, from 81% in April. The ratio was the highest since November 2008.
But first-time buyer loans also increased slightly, and with a typical income of £35,700, the average buyer earned more than they did the previous year. The age of the typical first-time buyer remained at 29.
Edinburgh Mortgage Advice director Mark Dyason said brokers were seeing the return of the first-time buyer: “In Spring, something happened. The first-time buyer said: ‘Enough is enough, I’m going to buy.’ They have been sick of waiting for a long time and are now committing en masse.”
Product innovation and a desire to make the most of good rates would have also encouraged buyers, he suggested.
SPF Private Clients chief executive Mark Harris said the government’s attempts to get the banks lending again were working: “Average deposits have fallen and continue to do so as lenders offer more innovation and better rates at higher LTVs.
“With the Government expected to supply more detail on the Help to Buy guarantee scheme in the next fortnight, we expect the number of first-time buyers to continue to improve.”
David Copland director of mortgage services at LSL said this positivity should continue for another quarter, but cautioned: “My concern is that we have a hiatus in the market which will result in a slowdown in the fourth quarter of this year. Lenders could well restrict lending to some extent as they prepare for the implementation of the Mortgage Market Review, and some borrowers may hold off taking out a mortgage until the second part of the Help to Buy scheme comes in, in January, at which point they will need much smaller deposits and the government will underwrite 20% of the loan.”