First-time buyer numbers increased in February

Home movers took out 22,500 loans worth £3.7 billion, a 2% increase in number and a 3% increase in value from January and a 16% increase in number and 19% increase in value from February 2011.

House purchase lending rose in February. 36,600 loans (worth £5.4 billion) were taken out, up 4% by number and 2% by value from January and up 17% by number and 20% by value from February last year.

Remortgaging continued to decrease in February. £3.3 billion was advanced, a 6% fall compared both to January 2012 and February 2011.

For the first time since April 2011, there was an increase in the proportion of income first-time buyers spent on mortgage interest payments, from 12.1% in January to 12.5% in February. This is likely to reflect a combination of factors including an increase in average first-time buyer income multiples (from 3.19 to 3.23) and a modest increase in some borrowing rates. This still leaves mortgages for first-time buyers much more affordable than as recently as 2008, when first-time buyers on average spent 19.6% of their income on mortgage interest payments. First-time buyers borrowed on average 80% of their property’s value in February, unchanged in over a year.

Since the summer of 2011, more than 95% of first-time buyers have taken out repayment loans and February’s proportion was 96%, unchanged from January. Repayment loans to new home movers and remortgagors also increased in February from 81% to 82% for home movers and from 76% to 77% for those remortgaging.

51% of first-time buyers bought properties priced between £125,000 and £250,000 in February, up from 49% in January. February was the last full month of the stamp duty concession although next month’s data is expected to bring a further rise in first-time buyer numbers as they moved to beat the 24 March deadline.

CML director general Paul Smee said:

"It is encouraging to see the continuing year-on-year improvement in house purchase lending. However it is not yet clear whether the end of the stamp duty concession will lead to a falling off in first-time buyer numbers and how much this may be offset by the government’s NewBuy scheme, available to all buying a new build property."

David Newnes, director of LSL Property Services said: “Much of the rise in lending to first-timers will be put down to the rush to beat stamp duty which has undoubtedly contributed strongly to the spike in February. But the increasing value of loans over the year indicates there may be more to the growth in first-time buyer lending than a mad rush to beat the taxman. Loans only increased by 2% in value in February, while the increase over the year since February 2011 was ten times larger. Although the growing funding costs of banks has put high LTV lending under strain in recent months, over the longer term, conditions for first-time buyers have seen modest improvement. That’s why the return of stamp duty in this vital part of the market is potentially dangerous. We will have to wait until April’s figures to assess how much damage stamp duty is doing at the lower end of the market”.

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  1. Lindsay AH

    Thank you for your post Alex – some very interesting stats. I’m working on behalf of Aster Homes and their shared ownership scheme with Lakeshore apartments, and we’re finding that these schemes are also proving to be very popular at the moment. It is another affordable option that many people are not necessarily aware of, but can be very beneficial for first time buyers as it gets their foot on the property ladder without paying through the nose. It will be interesting whether the end of the stamp duty concession changes the direction of results.