There is good news for first-time buyers, as figures suggest access to finance is improving. Data from the Council of Mortgage Lenders showed the number of people getting their foot on the property ladder increased by three per cent in February. This is the best start to the year since 2008 and indicates government policies to boost lending are beginning to pay off.
Combined with January's figures, we now have the largest number of first-time buyers for the first two months of the year since the onset of the financial crisis. In February 2013, those successfully getting their foot on the property ladder totalled 17 per cent more than the same time in 2012. This equates to a total of 16,400 loans - 600 more than in January when 15,900 were recorded. In value, lending to first-time buyers totalled GBP 2 billion. This is the same as in January, but is 18 per cent higher than in February 2012 (GBP 1.7 billion).
However, it isn't good news across the board as overall lending dipped for house purchase and remortgage. First-time buyers accounted for 43 per cent of all house purchase loans in February, with other investors remaining subdued. This is the sixth consecutive month this indicator has stood above 40 per cent and suggest that while lending isn't improving for everyone, it is becoming easier for people to get on the property ladder.
Loan affordability data also highlighted that the market is becoming "marginally more favourable" for first-time buyers. In February, smaller amounts were borrowed than in February in absolute terms and relative to income. Those entering the property market borrowed 3.19 times their income in the second month of the year. This is down from 3.2 times in January. However, the average loan to value ratio remained at 80 per cent.
"This is likely to be associated with a shift towards the purchase of less expensive properties by first-time buyers, with a small increase in the proportion of properties bought for less than GBP 125,000," the Council of Mortgage Lenders explained.
- Wednesday 17 April 2013