More first-time buyers searched for advisers online in January

Unbiased.co.uk says it saw a surge in the number of first-time buyers seeking mortgage advice during January.

The firm tracks what consumers are looking for when they use its website to search for advisers.

It found that the proportion of first-time buyers using its site increased from 36% in December to 44% in January.

By contrast, the proportion of non-first-time buyers looking for purchase mortgages fell from 22% to 19%, and those seeking remortgage advice fell from 38% to 35%.

David Elms, spokesman for Un-biased.co.uk, says: “While there has been some pick-up in market interest which may or may not be followed through in the coming months, these figures confirm that borrowers recognise they need mortgage advice more than ever.”

But despite the boom in the number of first-timers looking for advice the Council of Mortgage Lenders last week revealed that mortgage activity in 2008 plunged to levels last seen in 1974. It says there was a sharp decline in house pur-chase loans in 2008. These were down 49% compared with 2007.

There were 516,000 house purchase loans in 2008 – a decline of 49% on 2007.

Some 32,000 house purchase loans were made in December. This represents a decline of 5% compared with November and is the lowest figure since monthly records began in 2002.

The CML’s figures also show that remortgaging declined by 26% from November to hit 40,000 loans in December as the combination of attractive reversion rates and more restrictive lending criteria meant the best option for many borrowers was to stay on their existing deals.

The lack of liquidity also hit first-time buyers. Just 12,100 loans – worth £1.4bn – were provided in December to those taking their first steps on the housing ladder. Again, this is the lowest figure since the CML began monthly tallies.

First-time buyers typically had deposits of 22% in December – the highest proportion in 34 years of available data.

The average first-time buyer borrowed 3.1 x income and spent 17.1% of their salary on interest payments.

Michael Coogan, director-general of the CML, says: “The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year. The level of transactions is insufficient for the functioning of an efficient market.”

The Bank of England also warned last week that the economy will contract rapidly in the first half of this year and that the recession may last longer than anticipated.