Number of first-time buyer mortgages hits highest level in nine years
Posted 24 February 2017 by
Keith OsborneStrong first-time buyer activity pushed the UK mortgage market 7% higher in 2016 with new purchasers borrowing the largest cumulative amount on record.
Homebuyers borrowed £127.7bn in 2016, a rise of 7% on 2015 with 698,900 loans being handed out. Figures from the Council of Mortgage Lenders (CML) have revealed that more mortgages were handed out to first-time buyers during 2016 than in any other year since 2007.
A total of 338,900 mortgages were advanced to first-time buyers across the UK in 2016, the highest figure in nine years. In total, first-time buyers borrowed £53.2bn last year, the highest annual total for this sector since the CML's records started in 1974. The previous high was the £48.6bn handed out in 2006.
The figures have partly been driven by a rise in house prices, with Office for National Statistics (ONS) figures showing that a first-time buyer in Britain faces paying 7% more for a home than a year ago. The average price paid by a first-time buyer for a property is now £184,973.
First-time buyer lending ended 2016 on a high. Borrowers taking out their first home loan borrowed £5.1bn in December, up 9% on November and 13% on December 2015. The CML data reveals that the average first-time buyer put down a deposit of 18.1% in December and 17.4% of their household income went on mortgage repayments.
Mortgage market “resilient and adaptable”
Remortgaging activity also reached historic levels in 2016 according to CML figures. Remortgage activity rose by 14% by volume and 20% by value (to £66.2bn) compared to 2015. The number of remortgage loans was at its highest since 2009. Gross buy-to-let lending also saw year-on-year increases, up 3% by volume and 7% by value.
Paul Smee, director general of the CML, said: “2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable.
“Homeowner house purchase lending increased, though the buy-to-let sector's positive lending performance has been driven primarily by remortgaging. We do not expect the market volumes to show a year-on-year increase in 2017, instead remain similar to that achieved in 2016.”