Building society first-time buyers loans up 50%

Members of the Building Societies Association have reported loans to first-time buyers were up by 50 per cent in the first five months of this year compared with the same period in 2012, with more than 32,000 buyers getting their first mortgage.

Among first time buyers with a deposit of 10 per cent or less the difference between this year and last was even more marked with more than two and a half times the number of loans arranged, increasing from 3,400 to 8,900.

The BSA data also revealed in the five months to May, mutuals lent £14.5bn, a 24 per cent share, up from £11.4bn (20 per cent share) in the same period last year.

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On a net basis, after repayments on existing mortgages are taken into account, mutuals lent £1.2bn in May, up from £900m in May last year.

The mutual sector remains the only part of the mortgage market in the UK where mortgage balances are rising, the BSA said.

Savings balances held with building societies and other mutuals rose by £1.1bn in May, compared to an increase of just £200m in May last year.

In the five months January to May, the amount of savings held increased by £3.7bn.

This is in sharp contrast to the same period last year when deposits fell by £1.1bn.

Paul Broadhead, head of mortgage policy at the BSA, said: “Supporting first-time buyers is very much part of the sector’s ethos and in the first five months this year the number of loans to this group jumped by 50 per cent compared to last year.

“Importantly, as deposits remain a clear barrier to home ownership, building societies and other mutuals have made over two and a half times as many loans to first-time buyers with a deposit of 10 per cent or less.

“On the savings side, the strong inflows suggest that mutuals are offering attractive products despite the challenges for providers and savers alike in relation to generally low interest rates across the market.

“For consumers the ongoing tough economic conditions faced by many households remain difficult.”