53% rise in FTB numbers, says FSA report

The number of mortgages sold to first-time buyers for properties worth between £120,000 and £250,000 went up by a whopping 53 per cent between the second quarter of 2011 and the first quarter of 2012, according to the FSA’s latest mortgage product sales data.

The increase comes on the back of the end of the government’s freeze on stamp duty, which ended in March this year, and compares to a 10 per cent fall the previous year for properties in that price bracket.

Overall first-time buyer numbers went up by 6.7 per cent, remortgaging was up 9.8 per cent and overall mortgage sales rose 3.7 per cent.

Fixed-term mortgages were the most popular option with 62.5 per cent of sales, tracker mortgages were second representing 23.2 per cent of total sales followed by discounted variable at 7.8 per cent.

The massive boost in first-time buyer sales led to the majority of sales being concentrated in the 75 per cent plus LTV bands, with significant gains made in the 85 per cent to 90 per cent band as well as the 90 per cent to 95 per cent band. These increase are made from a low base however.

The report says: “The concentration of sales in the high LTV bands is due to the role played by first-time buyers, who have driven the rise in the last few quarters with the aid of the government’s stamp duty land tax relief scheme. They need higher LTV ratios and income multiples than other borrower types to enter the property market. As a result, the average LTV has increased slightly from 59 per cent in Q2 2011 to 61 per cent in Q1 2012.”

But the most popular band continues to be 50 per cent to 75 per cent, which the FSA reports accounted for 37 per cent of all sales during the year.

And the FSA says the number of income-verified mortgages reached the highest level since data collection begun in the second quarter of 2005, at 74 per cent.

Emba Group’s group sales and marketing director Mike Fitzgerald says: “First time buyers are starting to come back and I think we will see the numbers increasing in the next six months. It shows there is a lot of confidence about, with the new schemes coming out offering incentives for first-time buyers, and prices have come off the boil a bit so affordability is a little bit better. First-time buyers can now reach the property they want to buy whereas a few years ago there were well out of reach.”

“I think the next report will show even more remortgage work because SVRs have just gone up so now it’s in most people’s interest to talk to an independent mortgage broker.”