First-time buyer loans hit highest amount in 7 years

The value of residential loans advanced to first-time buyers increased over the third quarter to £12.1bn, the highest quarterly amount since Q3 2007, according to the latest figures from the Bank of England and the Financial Conduct Authority.

The UK mortgage lenders and administrators statistics for the third quarter this year also showed that buy-to-let lending increased to £8bn from the £5.9bn advanced in Q3 2013, the highest quarterly amount since Q2 2008.

Gross advances of £55.9bn were 13 per cent higher compared with the third quarter last year, making it the highest amount advanced in the third quarter of a year since Q3 2008.

Article continues after advert

The overall value of the residential loan amounts outstanding was £1,256bn during the third quarter, an increase of 0.5 per cent compared with the second quarter and 1.8 per cent up on Q3 2013.

The quarterly statistics are aggregated from the returns of around 300 regulated mortgage lenders and administrators.

The proportion of gross advances at fixed rates increased for the eighth consecutive quarter to 82.6 per cent, the highest proportion since the statistical series began in 2007.

Overall average interest rates on gross advances increased by 5 basis points, to 3.31 per cent from 3.26 per cent in the second quarter.

The number of new arrears cases in the third quarter was 24,146. This was 2.5 per cent lower than in the second quarter and was the lowest since the series began.

New cases taken into possession totalled 5,157 in the third quarter, a 10 per cent reduction from the second quarter. The stock of possession cases remaining unsold also decreased to 9,053 in Q3, the lowest since the series began.

Jonathan Harris, director of mortgage broker Anderson Harris, added that the third quarter was stronger from a lending perspective as “heightened activity in the housing market in the first half of the year filtered through into the lending figures”.

He said: “The proportion of first-time buyers decreased slightly although the value of loans taken out by them over the quarter rose to the highest quarterly amount since Q3 2007. With lenders offering higher loan-to-values and rates falling across the LTV bands, it is slightly easier for first-time buyers although the Bank of Mum and Dad is still being called upon significantly to help.

”Income multiples decreased slightly, which is likely to be a knock-on effect of the Mortgage Market Review and stricter affordability criteria. It is good to see that borrowers are not over stretching themselves; however, some easing of the rules with regard to older borrowers in particular is essential.

“Buy-to-let continues to grow as lenders offer cheaper rates and more relaxed criteria to attract investors. With more people having to rent for longer until they can save up a deposit, the prospects for the sector continue to be strong and we expect it to perform well next year.”