Increase in lending to first-time buyers

The number of first-time buyers in the UK increased by 3% in February, marking the best start to a year since 2008, according to new data from the Council of Mortgage Lenders (CML).

In all, says the CML, activity in the first-time buyer sector was 17% stronger in February than in February last year. A total of 16,400 loans were advanced, up on 15,900 in January and 14,000 at the same time last year.

In fact, first-time buyers accounted for 43% of all house purchase loans in February. This was the sixth consecutive month that this indicator has been at or above 40%, suggesting that market conditions continue to improve for first-time buyers.

However, first-time buyers typically borrowed a smaller amount in February (an average 3.19 times their income) than in January, (3.2 times their income).
According to the CML, 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 £125,000.

“First-time buyers are continuing to take advantage of more favourable market conditions, helping to drive the underlying trend for resilient house purchase lending,” said CML director general Paul Smee. “We hope that the new initiatives announced by the government in the 2013 Budget will further stimulate first-time buyer activity but also help those ‘second steppers’ looking to move into a new or existing home.”

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