The number of loans to first-time buyers surged 38 per cent higher in January 2014 compared to the previous January, the Council for Mortgage Lenders has revealed.
Home-owner loans for the month were also up substantially, an increase of 30 per cent on January 2013. The Bank of England reported earlier this month that gross mortgage lending in the UK was £16.1bn in January, up 39 per cent year on year.
Although overall figures were down on a monthly basis compared to December 2013, the CML attributes this to a traditional seasonal dip.
Henry Woodcock, principle mortgage consultant at mortgage systems supplier Iress, said: “The mortgage market is in fine fettle at the moment.
“First-time buyers are taking advantage of very competitive rates on offer and the increasing choice of mortgage deals without colossal deposits, while the prospect of house price appreciation is drawing demand from new buyers.
“Equally, buyers benefitted from the scramble from lenders to make use of cheap funds in the funding for Lending before mortgage lending was no longer eligible for the scheme.”
Although he predicts this “flurry of activity” will continue this month in advance of the Mortgage Market Review coming into effect, he adds that there are “clouds on the horizon”.
“The MMR’s implementation in April will undoubtedly cause some hiccoughs, while the Budget may see Help to Buy scaled back.
“If this is the case, the chancellor must take care not to pull the rug from the housing market recovery too early, especially in regions that have not made the same strides as London and the South East.”
Alan Cleary, managing director of Precise Mortgages, said that although first time buyers are clearly feeling more confident, all is not “plain sailing”.
He said: “First time buyer numbers are still not yet at pre-crisis levels and today’s data compared to the summer of 2007 still shows a substantial disparity. Making up this gap could be potential buyers currently left un-served by mainstream lenders so it’s paramount that there are products that cater to all credit worthy buyers.”
