Mortgage blog: First-time buyer loans up 14% as rates continue to fall

New figures have revealed that the number of first-time buyer mortgages advanced in October was 14% higher than the same month in 2013. The data from the Council of Mortgage Lenders (CML) show that around 3,000 more borrowers took their first step on the housing ladder this October compared to a year ago.

As mortgage lending rose slightly overall, buy-to-let mortgage approvals continued to surge.

Big increase in buy-to-let and first-time buyer loans

The latest data from the CML showed that a total of 29,200 loans were advanced to first-time buyers in October, up from 26,200 a year earlier. By value, lending to first-time buyers was up 22% from £3.6bn in October 2013 to £4.4bn a year later.

Buy-to-let lending also increased significantly in the year to October 2014. A total of 19,600 buy-to-let mortgages were advanced in October, up 22% a year earlier. Total buy to let lending rose from £2.1bn to £2.7bn.

The CML revealed that gross mortgage lending across all buyer types was up 6% year-on-year from £17.5bn in October 2013 to £18.6bn in October 2014.

CML director-general Paul Smee says: “This has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy-to-let lending showing steady, consistent growth through 2014 compared to 2013. Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts the new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes.”

Excellent rates continue to tempt borrowers

Over recent weeks, one of the reasons for an upturn in mortgage business has been the price war between the country’s major lenders. The cost of borrowing has fallen in the last few weeks with several lenders offering record-breaking deals.

While the very best deals remain limited to borrowers with a significant deposit, there are some good rates out there on higher loan-to-value mortgages.

Keith Osborne, editor of Whathouse.com said: “There are some excellent deals for borrowers with a smaller deposit. For example, Leeds Building Society has a five-year fixed rate at under 3% available to 80% lending, although this does come with a substantial arrangement fee.

“Two-year fixed rates start at around 2.09% but again it is important to take into account both the headline rate and the fees.”

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