First-time buyers figures hit 6-year high

First-time buyers are making headway in the mortgage market, according to data from the Council of Mortgage Lenders (CML). But is this a sign of a reviving housing market and does it translate to additional business for advisers?

The data showed first-time buyers were at the highest levels since 2007 for quarterly totals, with the number purchasing their first home hitting 68,200 in the second quarter of 2013.

The figures follow positive data for June. The number of loans in the month hit 25,300 at a total value of £3.5bn - an average advance of £117,000 per buyer. The amount accounted for 46 per cent of all house purchases in June and the total was up 40 per cent on a year ago.

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Brian Murphy, head of lending at the Mortgage Advice Bureau, attributes the increased interest to a greater availability of products.

“Compared to where we were 10 months ago, there are more products at higher loan-to-value amounts and rates have come down even in that sector,” he said. “But 95 per cent loan-to-value is still very, very thin on the ground.”

Government initiatives are also likely to be playing a part in increased demand, he said. The first stage of the Help to Buy scheme was launched in April this year, whereby the government loans up to 20 per cent of the house value to the homebuyer if they put down at least 5 per cent as deposit. Loans are interest-free for five years and new properties up to a value of £600,000 are eligible for the scheme.

The second stage of the scheme, which applies to all properties instead of just new builds, comes into force from January 2014. But, following the positive data that has emerged from the first stage, there have been calls for the government to drop the second stage for fear of causing a housing bubble.

London has been leading the way in terms of the property market reigniting. However, Mr Murphy believes this is now starting to spread.

“The southeast has clearly led the start of events but it is currently filtering out into other regions,” he said.

For example, the Financial Times reported that it had seen government figures showing the largest take-up of the new scheme in the Midlands.

Mortgage advice is perhaps an area that has gone on the back-burner for many financial advisers over the past five years, but there are anecdotal signs that interest is again on the up for those looking to take advantage of an apparently reviving area.

“I am sure there will be people who will see the opportunity that the market has developed in the past three to six months, that they will see mortgages as an area to return to or start offering,” Mr Murphy said.

But, he added, the industry has changed massively in the past five or six years, with the development of network and broker groups and higher standards following the RDR. Some individuals who were offering mortgage advice at the height of the property boom are not likely to do so any longer, Mr Murphy said, which is probably a good thing.