Mortgage lending rises in March but FTBs have little to celebrate

Gross mortgage lending rose 24% in March from £9.3bn in February to £11.5bn, but research shows that lenders are still making life difficult for first-time buyers.

The Council of Mortgage Lenders says March’s figure was a 3% rise from the £11.2bn seen in March 2009 and is in line with the typical seasonal pattern of a rise in lending volumes.

But gross lending for Q1 2010 was an estimated £29.5bn, a 24% decline from Q4 2009 when lending totalled £38.9bn.

Figures from financial research specialist Defaqto shows that first-time buyers with small deposits are now paying substantially more for mortgages, making it difficult for them to get on the housing ladder.

David Black, banking specialist at Defaqto, says: “Three years ago there was little difference in the interest rates charged whether you had a 10% or a 25% deposit.

“Since the credit crunch hit the situation has changed significantly and those seeking higher LTV mortgages are now having to pay much more.”

But analysis from uk shows that first-time buyers who scrape together a 10% deposit are in a better financial situation now than if they had bought in autumn 2007.

Based on Nationwide Building Society’s house price calculator, Moneynet says a property worth £130,000 in Q3 2007 has now fallen 11.5% to £115,000 in Q1 2010.

A first-time buyer in 2007 would have needed a 5% deposit of £6,500 and to pay Stamp Duty of £1,300.

This would have given them access to a three-year fixed rate deal with Britannia Building Society at 6.19% with a £399 fee.

But although a first-time buyer in 2010 would require a 10% deposit of £11,500 there would be no Stamp Duty to pay.

The equivalent three-year fixed rate deal has dropped to 6.03% from Nationwide, with a £995 fee.

This gives a monthly repayment of £675.18 for today’s first-time buyers compared with £812.73 for 2007’s buyers.