Sharp rise in mortgage lending to first time buyers
There was a significant increase in lending to first time buyers in May, with the latest data from the Council of Mortgage Lenders (CML) showing that the number of mortgages to first time buyers reached 25,100, up 29% compared to April, and 42% higher than in May last year. First time buyers accounted for 45% of all loans for property purchase.
The number of first time buyer loans was the highest monthly figure since late 2007, while the value of first time buyer lending reached £3.4bn in May, up from £2.5bn in April and £2.2bn in May 2012.
First time buyers, at an average age of 29, are also typically borrowing more at an average of £113,400 in May, up from £110,000 in April and £105,000 in May last year.
David Whittaker, managing director of Mortgages for Business, said: "The return of first-time buyers is particularly welcome news and will help rebalance the market away from an over-reliance on wealthier buyers. First-time buyers are the lifeblood of the housing market, without them the whole property chain is sluggish."
Lending to home movers and those remortgaging property in the UK also increased in May. Some £8.4bn worth of lending for home purchase accounted for 57% of all mortgage lending in May by value while remortgaging at £4bn accounted for 27%, and other lending, including buy to let and further advances, at £2.3bn accounted for 16%.
"Although monthly lending is still running at far less than half its typical monthly level during the peak, there is no doubt that the mortgage market is firmly 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," said Paul Smee, director general of the CML.
Peter Williams, executive Director of the Intermediary Mortgage Lenders Association (IMLA), is also pleased to see that first-time buyer and buy-to-let activity can "prosper side-by-side".
He commented: ""The shift towards higher loan to values (LTVs) shows that lenders are pushing back against restrictive capital requirements and finding ways to help more people onto the property ladder. The Help to Buy mortgage guarantees should improve things further, so the pressure is on George Osborne to unveil a detailed proposal that lives up to expectations."