Mortgage blog: How building societies are supporting the first-time buyer

Posted 31 July 2013

If you're a first-time buyer, there's an increasing chance that your mortgage will be provided by a building society. That's according to new data which shows that building societies now account for almost one in four mortgages. And, lending to first-time buyers by mutuals in 2013 has risen by 50% compared to the same period last year.

The figures from the Building Societies Association show that mutual lenders are providing much needed support to the first-time buyer market.

Building societies now account for just under 1 in 4 mortgages

The latest figures from the Building Societies Association (BSA) show that mutuals lent £14.5bn in the first five months of 2013. This is equivalent to a 24% market share, up from a 20% share for the same period last year.

The BSA also reported that loans to first-time buyers were up by 50% in the first five months of this year compared with the same period in 2012, with more than 32,000 buyers getting their first mortgage.

"Building societies are clearly providing a much needed boost to this important area of the mortgage market," says Keith Osborne, editor of WhatHouse.co.uk. "They are uniquely placed to help new buyers as they can often offer a very local service and can tweak their criteria to accommodate certain types of buyer much more easily than a major bank. They have proved to be particularly helpful with low-deposit mortgages. Mutual lenders agreed 8,900 loans for people with a deposit of 10% or less in the first five months of 2013, more than two and a half times the number this time last year."

According to the BSA, the mutual sector remains the only part of the mortgage market in the UK where mortgage balances are rising. On a net basis, after repayments on existing mortgages are taken into account, mutuals lent £1.2bn in May 2013, up from £900m in May last year.

Paul Broadhead, head of mortgage policy at the BSA, says: "Supporting first-time buyers is very much part of the sector's ethos and in the first five months this year the number of loans to this group jumped by 50% compared to last year. Importantly, as deposits remain a clear barrier to home ownership, building societies and other mutuals have made over two and a half times as many loans to first-time buyers with a deposit of 10% or less."

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