Five questions answered on the rise in first time buyers
How big is it and what does it mean?
There has been a big boost in the number of mortgages taken out by first time buyers, according to the Council of Mortgage Lenders (CML). We answer five questions on the rise.
How many more first time buyers are there?
According to the CML, the number of mortgages taken out by first time buyers has risen by 42per cent in a year.
What has caused this surge in first time buying?
Mortgage brokers say it is proof that banks are lending again to first time buyers following government attempts to support the housing market.
Government schemes such as Funding for Lending, which offered £80 billion to banks to boost mortgage and business lending, have increased high loan-to-value lending.
The Help to Buy scheme launched in the March Budget, which is designed to help borrowers with small budgets, has also bolstered loans.
How many first time mortgages were actually approved this year compared to last?
In May, 25,100 first time buyer loans were approved, a rise of 29 per cent from April, and 42 per cent higher than May last year.
At its lowest figure just 8,500 loans were issued to first time buyers in January 2009.
A separate survey released today by e.surv reveals that June showed a total of 7,046 loans were approved to borrowers with deposits of 15 per cent or less – up from 4,790 loans at this level in June.
Total lending to home-buyers was up 23 per cent year-on-year, e.surv found.
What are people saying?
Richard Sexton, director of e.surv, told The Telegraph: “Last year the lending market was thorny for first-time buyers. But over the last year, lenders have softened the process for them to get a house purchase loan.
“Buoyed by Funding for Lending [the Government scheme], and having had enough time to adjust to regulatory requirements and balance sheet restructurings, banks are more prepared to lend at these levels.”
What next – will the figure continue to rise?
Possibly. The Bank of England’s Credit Condition Survey suggests lenders are planning to increase their lending levels to buyers with a 10 per cent deposit in the third quarter of the year.