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Latest CML figures suggest first time buyers are getting more mortgages approved

This increase, as well as small rise in the number of home movers, contributed to a monthly jump in house purchase lending. Remortgage lending also increased compared to February but remained flat over the first quarter.

The data shows that overall a total of 19,100 loans worth £2.4 billion were advanced to first time buyers in March, up from 15,900 loans in February but down on the 24,400 loans advanced in March last year.
 
However, the CML pointed out that March 2012 marked the end of the first time buyer stamp duty holiday and resulted in a significant jump in activity, making meaningful year on year comparisons difficult.

Despite the spike in March last year, first time buyer lending activity over the first quarter of 2013 fell only marginally shy of activity in the first three months of 2012. Overall, 50,900 loans were advanced to first time buyers in the first quarter of this year, compared to 51,200 loans in the first quarter of 2012.

The data also shows that while the loan to value ratio for first time buyers remained at 80%, there has been a gradual increase in the proportion of first time buyers taking out loans with a deposit of 10% or less.

In the first quarter of the year one in four first time buyers put down a deposit at 10% or less,  up from one in five in the first quarter of last year. First time buyers also typically borrowed a slightly larger amount in March than in February, both in absolute terms and relative to their income.

First time buyers also continued to account for an increasing proportion of all house purchase loans, increasing to 45% in March from 43% in February.

Contributing to the rise in house purchase loans, lending to home movers increased in March. A total of 22,900 loans worth £3.8 billion were advanced to home movers in March, an increase of 11% from February.

On a quarterly basis, a total of 65,300 loans were advanced to home movers, down from 86,000 in the fourth quarter of 2012 and 71,600 loans in the first quarter of last year.

In line with the expected seasonal pattern, house purchase lending picked up in March compared to the first two months of the year.

A total of 42,000 house purchase loans were advanced in March worth £6.2 billion, marking a 15% rise on February lending. As expected, house purchase lending in March was down 19% on March 2012 but this was again due to distortions around the end of the stamp duty concession in March 2012.

On a quarterly basis, 116,200 loans were advanced for house purchase in the first quarter worth £17.2 billion, a 21% fall compared to the fourth quarter of 2012 and down by 5% compared to the first quarter of last year.

Remortgage lending increased by 15% in March, but remains low compared to historical levels, and was 14% lower than March last year.

In the first quarter overall, £9 billion was advanced to borrowers remortgaging, a 10% fall compared to the fourth quarter of 2012 and down by 19% compared to the first quarter last year.

Intermediaries increased their market share in the first quarter among all borrower types. Some 52% of remortgage borrowers took out their loan via an intermediary, compared to 48% in the fourth quarter of 2012, while 48% of home movers and 55% of first time buyers went via an intermediary, up from 45% and 54% respectively in the fourth quarter.

‘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,’ said CML director general Paul Smee.

‘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,’ he added.

Brian Murphy, head of lending at the Mortgage Advice Bureau (MAB), said that the best news from the CML is the four year high in the proportion of first time buyers accessing loans with a deposit of 10% or less.
 
‘Competition under the Funding for Lending Scheme (FLS) has prompted lenders to improve their offers higher up the loan to value (LTV) curve, opening up the market to borrowers without a large deposit and making it easier to achieve their home owning ambitions,’ he explained.

‘First quarter activity has held up remarkably well given last year’s added incentive of the stamp duty holiday. Without this extra boost, this year’s comparatively healthy figures are an encouraging sign of the improving market for first time buyers in 2013,’ he said.

‘The battle among lenders for bigger volumes has continued to fuel consumer choice, with nearly 2,000 more products available on average in March 2013 compared with March 2012. Brokers have a crucial role to play in identifying the best deal for each person’s circumstances, so it’s encouraging to see more borrowers turning to expert advice,’ he added.

According to Paul Hunt, managing director of Phoebus Software, the figures are a sign that the mortgage market is turning over a new leaf. 'Although the economy isn’t quite out of the woods yet, there is a much wider range of good mortgage deals hitting the market as a result of easing funding conditions for banks. Lenders are to thank for a boost in mortgage activity due to their ongoing, proactive efforts to support buyers from all different ends of the spectrum,' he said.

'The Funding for Lending scheme is making a real difference and the Help to Buy scheme is pushing up demand for housing substantially while also boosting market confidence. The industry is performing well, and green shoots of growth are beginning to sprout but for these to turn into daffodils there needs to be further sustained growth in the mortgage market,' he added.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA) described it as 'steady progress' and said not only had there been significantly more loans to first time buyers and home movers, but also a monthly increase in overall house purchase and remortgage lending.
 
'To an extent it is no more than we would expect at this time of year, but the quarterly fall in house purchase volumes suggests that consistent growth is yet to emerge. However the figures indicate that first time buyers can still find their way to a favourable deal without the added incentive of the stamp duty holiday,' he said.
 
'The figures also show lenders pre-empting Help To Buy by advancing more 90% plus loans to first time buyers compared with last year. Even without the government acting as a guarantor, the market has moved to assist first time buyers with smaller deposits,' he explained.
 
'Understanding the range of deals and schemes now available for home buyers is a significant task, and advice from intermediaries is increasingly important for anyone searching out the most appropriate loan in the current market,' he added.
 

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