First-time house buyers at their highest number for ten months, says CML

Published 10th Aug 2011

First-time buyers hit the highest level for ten months in June, but their numbers are still down on a year ago, mortgage figures show.

There were 18,100 loans to first-time buyers worth a total of £2.2billion in June 2011 – 24 per cent higher by volume and 29 per cent higher by value compared to May 2011.

But the Council for Mortgage Lenders (CML) data shows that first-time buyers are still 8 per cent lower by volume and value than a year previously.

Looking at the housing market in general, home movers took out a total of 28,600 loans worth £4.6billion in June.

This is up from 23,800 loans worth £3.7billion in May 2011, but is still down on figures from a year previously. In June 2010, there were 32,800 loans worth £5.3billion.

Overall, there were 46,700 loans for house purchase worth £6.7billion in June, up 22 per cent from May, but down 11 per cent by volume and 13 per cent by value on June 2010.

That figures are still down on a year ago, has brought doubt from some experts that the market is improving.

Howard Archer, chief UK and European economist at IHS Global Insight, said: ‘It should be noted that June is normally a strong months for housing market activity.

‘While there are signs that housing market activity has edged up from its lows recently, it remains very low compared to long-term norms and we see no reason to change our view that house prices are likely to fall by around 5% overall from current levels by mid-2012 in the face of persistent troublesome economic fundamentals.

‘We suspect that squeezed purchasing power, tightening fiscal policy, a softening labour market and persistent serious concerns over the economic outlook will weigh down on potential buyers and dampen house prices. On top of that, there are still significant difficulties in getting a mortgage - particularly for first-time buyers.’

And despite the encouraging figures from the CML, in recent days, the Royal Institute of Chartered Surveyors (RICS) say that property sales have hit a two-year low and property prices are falling. Property website Rightmove has also labelled seven out of the 11 regions in the UK as a ‘first-time buyer blackspot’.

According to the CML data, there was little change in lending requirements for either first-time buyers or home movers in June.

First-time buyers, on average, paid a 20 per cent deposit, unchanged since February. First-time buyer deposits are lower than the high of 25 per cent seen throughout 2009, but higher than the historic average of around 10 per cent.

Chris Gardner, director of mortgage broker obligo.co.uk, said: ‘The June spike in first time buyer mortgage advances reflects the surge in products at higher LTVs and the more favourable criteria of lenders.

‘There are now plenty of competitive 90% products in the market and we are also seeing more lenders move into higher LTVs, which is driving rates down further.’

The popularity of fixed-rate mortgages continued to push upwards in the April to June period, with 63 per cent of borrowers opting for this mortgage type, compared to 60 per cent in January to March and just 46 per cent in the last three months of 2010.

Paul Smee, CML director general, said: ‘Whilst there are clearly financial uncertainties ahead, it is encouraging to see more house buyers surfacing at the start of the summer.

‘Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while.’

Source: ' ThisIsMoney '

View All Latest News