According to the latest data from the Office of National Statistics (ONS), first time buyer lending in the UK increased by 14% in August compared to July, and was up 18% year-on-year. Overall, lending for house purchases increased by 12% compared to July, and by 11% year-on-year. The ONS also found that lending for house purchases increased during the third quarter of 2012.
A grand total of 21,600 loans were given to first time buyers, worth some £2.8billion. This was just 2,600 less than the total for March, which saw a people rush to beat the end of the first time buyer stamp duty holiday. The average loan to value ratio for a first time buyer stayed above 80% for the second consecutive month. The LTV ratio is reportedly at its highest point in over three years, at 81%. Whether or not this is a consequence of the launch of the FirstBuy scheme remains to be seen, as it is apparently too early to properly research its effects on the property and mortgage markets.
CML director general Paul Smee said: “House purchase lending showed an encouraging rise in August but it’s unclear whether this reflects just the unravelling of a previous factors such as the Jubilee and the Olympic Games, or a shift in the underlying picture. We will wait and see whether schemes such as Funding for Lending and NewBuy provide a further boost to the market in coming months.”
David Whittaker, MD of Mortgages for Business, said a rise in the number of first time buyers was an encouraging sign but shouldn’t be taken as an indication that the housing market is to return to its pre-2007 levels: “This section of the market is the lifeblood of the property sector and a boost is welcome. We shouldn’t get ahead of ourselves though. This rise is like bringing a water pistol to a gun fight; it might look the part but it’s not going to save the day.
Thousands remain reliant on the private rental sector and landlords need to help fill the shortfall. Luckily, the buy to let market is performing well and can help provide the safety net so many would-be buyers need at the moment.”
A lack of available products, high deposits and tight lending criteria have all been cited as reasons why first time buyers have found it difficult to get on the property ladder for the past 12 months. However, things are changing, albeit gradually. Lenders such as The Cooperative offering those with 15% deposits access to a five-year mortgage with a rate of 3.99%. Meanwhile, First Direct are offering a two-year fixed deal at 4.29% with a product fee of £999.
Source: Property Wire.