First-time buyer activity jumps 20% in March

The number of first-time buyers increased 20 per cent in March, according to data published today by the Council of Mortgage Lenders.A total of 19,100 loans, worth £2.4bn, were advanced to first-time buyers in March.

This is up 20 per cent on the 15,900 loans in February but down 21.7 per cent on the 24,400 loans advanced in March last year. However, March 2012 marked the end of the stamp duty holiday, resulting in a jump of activity.

Despite the spike in activity due to the end of stamp duty holiday, first-time buyer activity over the first quarter only just fell shy of activity in the first three months of 2012. Overall, 50,900 loans were advanced to first-time buyers, compared to 51,200 loans in the first three months of 2012.

There has been a gradual increase in the proportion of first-time buyers taking out loans with a deposit of 10 per cent or less. In the first quarter of the year, one in four put down a deposit of 10 per cent or less, up from one in five in the first quarter of last year. However, the average deposit is still 20 per cent.

First-time buyers also accounted for an increasing proportion of all house purchase loans, increasing to 45 per cent in March from 43 per cent in February.

Home purchase lending picked up in March, with a total of 42,000 loans advanced, worth £6.2bn. This is a 15 per cent rise on February’s figure of 36,600, worth £5.3bn, although the figure was down 19 per cent on March 2012, as a result of the end of the stamp duty holiday.

A total of 22,900 loans, worth £3.8bn, were advanced to home movers in March, an increase of 11 per cent from February, when there were 20,700 loans advanced, worth £3.4bn. On a quarterly basis, 65,300 loans were advanced to home movers, down from 86,000 in Q4 2012 and 71,600 in Q1 of 2012.

There were 23,300 loans, worth £3.1bn, advanced to remortgage customers in March, up 15 per cent on the 20,400 loans, worth £2.7bn, advanced in February.

Intermediaries increased their market share in the first quarter. In Q1 52 per cent of remortgage customers took out their loans via an intermediary, compared to 48 per cent in Q4 2012, while 48 per cent of home movers and 55 per cent of first-time buyers went via an intermediary, up from 45 per cent and 54, respectively, in the fourth quarter of 2012.

CML director general Paul Smee says: “First-time buyer activity in the first quarter was nearly at the same level as last year – when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.

“More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years – a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.”

SPF Private Clients chief executive Mark Harris says: “The mortgage market continues to prosper. Those all-important first-time buyers are returning to the market, with a 20 per cent jump in their numbers compared with February. This is crucial to the overall health of the housing market and with the extension of Funding for Lending to January 2015 we should see more higher loan-to-value deals to temp those with modest deposits.

“First-time buyers are still putting down an average deposit of 20 per cent but there has been an increase in those taking out loans with a 10 per cent deposit, showing that more competitive options are moving up the LTV curve.”

Mortgage Advice Bureau head of lending Brian Murphy says: “Competition under the Funding for Lending scheme has prompted lenders to improve their offers higher up the LTV curve, opening up the market to borrowers without a large deposit and making it easier to achieve their home-owning ambitions.”