Mortgages  

First-time buyers lending at highest level since 2007

Council of Mortgage Lenders statistics show 68,200 purchased their first home in the second quarter of 2013.

Data showed 25,300 loans were advanced to first-time buyers in June, a 30 per cent increase on the 19,400 loans advanced in June last year.

Following the strength in first-time buyer activity in May and June, quarterly lending to first-time buyers was at its highest since 2007.

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First-time buyers continued to increase the amount they borrowed, with an average loan size of £117,000 in June up from £112,500 in May.

As a result of this there has been a stronger growth in the value of loans advanced to first-time buyers which totalled £3.5bn, an increase of 9 per cent in value compared to May and 40 per cent on June last year.

The CML stated this is likely to be associated with the growth in house prices in recent months - in June 34 per cent bought a home less than £125,000, down from 37 per cent in May.

While first-time buyers borrowed more in June, an increase in income, along with falling interest rates mean, according to the CML, there has been no deterioration in the affordability of these loans as typical first-time buyers mortgage payments consumed 19.3 per cent of first-time buyers’ income – unchanged from May.

First-time buyers accounted for 46 per cent of all house purchase loans in June, which was up from 44 per cent in May and considerably higher than the 38 per cent seen on average since 2007.

Paul Smee, director general of the Council of Mortgage Lenders, said: “First-time buyers have become a strong driver in the growth of mortgage lending this year proving that market conditions are favourable for them.

“With increased interest in home buyers ability to cope with the eventual rise of interest rates, it is particularly reassuring to see borrowers choosing to fix their payments and for longer in record numbers.”