First-Time Buyer Levels Jump 20% As Market Bubbles Again

A total of 19,100 loans worth £2.4billion were advanced to first-time buyers, up from 15,900 loans in February, said the Council of Mortgage Lenders.

There were fewer than in March last year, when 24,400 loans were advanced, but in 2012 that month marked the end of the first-time buyer stamp duty holiday - resulting in a spike of activity that renders the year-on-year comparison less meaningful.

Overall, 50,900 first-time buyer loans were advanced in the first three months this year, compared to 51,200 loans last.

The Government's Funding for Lending Scheme gave cheaper money to lenders, driving down mortgage rates, and its subsequent Help to Buy scheme helps people buy a new-build home with a deposit as low as 5%.

CML director general Paul Smee said: 'Activity 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.'

There has been a gradual increase in the proportion of new buyers taking out loans with a deposit of 10% or less - a quarter, up from 1 in 5 - and they continued to account for an increasing proportion of all house loans, increasing to 45% in March from 43% in February.

This increase, as well as a small rise in the number of home movers, contributed to a monthly jump in mortgage lending - but this is true to the expected seasonal pattern.

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

It meant 116,200 loans were advanced in the first quarter, worth £17.2billion.

The first-time buyer market is clearly starting to bubble again after falling flat since the financial crisis. Lenders are in a much better position to support high loan-to-value (LTV) borrowers, and that is beginning to translate into a wave of activity at the bottom of the market. These are the most encouraging signs yet of a genuine recovery in the housing market.

Last year banks were hesitant to lend to first-time buyers with a deposit of less than 20%, but now they’re in a much better position to consider mortgage applications from high LTV borrowers, thanks largely to the Funding for Lending Scheme. Remortgage lending also increased compared to February, up 15%, but remained flat over the first quarter.

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