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First-time buyers at lowest level since 2007

First-time buyers made up the lowest proportion of house purchase loans since September 2007, according to figures released today by the Council of Mortgage Lenders.

They accounted for 35% of all house purchase mortgages, down from 39% in March and 38% in April 2009.

The low share of the market shows that getting a mortgage remains problematic for first-time buyers who tend not to have a substantial deposit.

Overall, there were 40,000 loans advanced for house purchase in April worth £5.7bn, down from 45,000 – worth £6.3bn in March but up from 35,000 – worth £4.5bn in April 2009.

April’s seasonal dip was expected due to the Easter break and the underlying trend is of a gradual recovery in house purchase lending.

The dip was more strongly felt in remortgage activity, where the trend remains firmly down in contrast to lending for house purchase.

There were 24,000 remortgage loans worth £2.9bn, down 16% , 17% in value from March and 26% lower – both in volume and value than a year ago.

With expectations for rates to remain low for the immediate future, and lending criteria still tight, remortgaging is likely to remain muted. 

Although there has been some increase this year in the number of higher LTV products available, this has not yet translated into a sustained increase in loans to borrowers with lower deposits.

The trade body says the tentative signs of easing experienced in March returned to their previous levels in April, with the typical first-time buyer borrowing 75% and the typical home mover 67% of their property’s value. 

Michael Coogan, director general of the CML, says: “Easter traditionally causes a dampening of lending levels and this year was no exception.

“First-time buyers were particularly affected, perhaps because of the alteration to stamp duty, and in anticipation of the changes arising from the economic and political uncertainty of recent months.

“Lending for house purchase still looks modestly positive compared to 2009. But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income.”

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  • Mortgage Comparison 23rd December 2010 at 11:53 am

    In the number of higher LTV products available,
    ———–
    [URL=”http://www.heritagemortgageinc.com” rel=”dofollow”]Mortgage Comparison[/URL]

  • Hard Working Broker 15th June 2010 at 10:33 am

    What we try to do as advisers on mortgage finance is provide our first-time clients with a realistic view of the market and their place in it.

    We believe that if you are knowledgeable about what you can truly expect to achieve then it saves time wasting in what can be a futile quest for something which is ultimately unachievable for the majority of FTBs in the present market.

    The statement today by the CML is therefore, unsurprisingly, very accurate but something far more closely aligned to the ‘bleeding obvious’.