'Marked' rise in first-time buyers

%VIRTUAL-SkimlinksPromo%Sold signFirst-time buyer numbers have lifted to their highest levels in five and a half years as the housing market shows a "marked" improvement, lenders have reported.

Some 25,100 loans worth £3.4 billion were advanced to people taking their first step on the property ladder during May, representing the highest volume seen since November 2007, Council of Mortgage Lenders (CML) figures showed.
Banks and building societies are also giving more low-deposit loans the green light. First-time buyers typically put down a 17% deposit in May, edging down from an average 19% deposit needed the previous month and the lowest figure since November 2008.

Mortgage lending to this sector is two-fifths (42%) higher than it was a year ago and shows a sharp contrast to a low point of 8,500 loans in January 2009, the CML said.

However, the typical age of a first-time buyer has held steady for some months at 29.

The figures follow a recent Bank of England survey of lenders which found that their "risk appetite" is returning and they are planning to make mortgages more readily available and hand out more low deposit deals in the coming months.

However, the CML pointed out that mortgage lending is still low by historic standards.

Paul Smee, director general of the CML, said: "Although monthly lending is still running at far less than half its typical monthly level during the peak, there is no doubt that the mortgage market is firmly open for business. Both the borrowing appetite of first-time buyers and the availability of attractive mortgages for them have improved markedly since a year ago."

Mortgage availability has increased sharply and lenders have been slashing their rates following the launch of a Government scheme last August called Funding for Lending, which gives lenders access to cheap finance. Other initiatives such as NewBuy and Help to Buy are specifically aimed at people with low deposits.

Recent examples of lenders bringing out more innovative deals include a range launched by Leeds Building Society this week, which allows borrowers with a deposit as low as 10% to pay 0% interest for three to six months.

© 2013 Press Association
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