First-time buyer lending cools across UK regions

First-time buyer mortgage advances across much of the UK declined or remained flat in the third quarter, according to new data published by the Council of Mortgage Lenders, in a further sign the market is cooling in the wake of recent regulatory intervention.

Four press releases covering London and the devolved regions all reported an increase in new buyer lending for the three months to September compared to a year ago, with the strongest annual growth of 25 per cent recorded in Northern Ireland.

However, only London with 13,300 loans showed any volume growth compared to Q2, up 8 per cent for the three months to September against the preceding period. This was stronger even than the 6 per cent expansion compared to the third quarter of 2013.

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In Scotland the 7,500 first-time loans advanced over the three months represented a 1 per cent decline on the second quarter, but a year-on-year rise of 15 per cent. In Wales there were 3,300 first-time loans, down 3 per cent on a quarterly basis but up 18 per cent year on year.

Northern Ireland’s figure of 2,000 loans was flat compared to Q2, despite the substantial rise on 2013.

Amounts borrowed rose more strongly and consistently across the regions, suggesting house price growth has continued and that valuations are substantially up nationwide compared to last year in spite of measures to curb inflation.

In London the £3.3bn borrowed was up 11 per cent and 16 per cent on a quarterly and annual basis, while Scotland’s £810m was up 1 per cent and 23 per cent. Wales and Northern Ireland were both flat on the previous quarter but at £350m and £170m they were up annually by 23 per cent and a massive 42 per cent.

Remortgage activity was more buoyant across the board, with London, Wales and Northern Ireland all showing double-digit increases of between 11 per cent and 16 per cent on the second quarter, while Scotland was up a more modest 2 per cent.

David Newnes, director of Reeds Rains and Your Move estate agents, commented that while conditions may have cooled in recent months, there is still a “spirited flow” of mortgage lending that looks set to continue making progress into 2015.

“In terms of house price growth, London and the South East have been at the forefront of the pack – but schemes like Help to Buy have provided some extra backing to other regions where property values are stalled, by championing first-time buyers.”

Richard Sexton, director of E.surv chartered surveyors, stated that global economic uncertainty may be sapping energy from the top of the market, but first-time buyer properties are still in high demand and short supply.

He added: “While wages remain sluggish and interest rates low, saving for a deposit will remain the biggest obstacle blocking the path to homeownership.”,