First-time buyer lending up 38%

Embargoed to 0001 Thursday March 6File photo dates 09/08/13 of Estate Agent's boards as the Government has failed to demonstrate whether its ?3.7 billion Help To Buy equity loan mortgage scheme is giving value for money, the spending watchdog has warned. PRESS ASSOCIATION Photo. Issue date: Thursday March 6, 2014. The scheme was launched in England last April with the aim of offering credit-worthy buyers with a deposit of at least 5% a helping hand onto the property ladder as well as increasing the housing supply by being targeted at new-build properties only. But the National Audit Office (NAO) found there is no method in place to measure what the

%VIRTUAL-SkimlinksPromo%The number of mortgages handed out to first-time buyers in January jumped by 38% on a year earlier, banks and building societies have reported.

The pick-up came amid signs that people taking their first step on the property ladder are starting to put down smaller deposits due to the Government's flagship Help to Buy scheme, the Council of Mortgage Lenders (CML) said.
A total of 21,800 loans worth £3.1 billion were advanced to first-time buyers in January, marking a 38% increase on the same month in 2013, according to the CML's figures.

But the latest number of first-time buyer loans also represents an 18% slide on the previous month's total, which had been a six-year high. Some 26,700 loans were handed out to first-time buyers in December, marking the highest monthly figure seen since late 2007.

The figures were released as the Royal Institution of Chartered Surveyors (Rics) reported that the surge in demand from potential buyers piling into the market as a result of schemes like Help to Buy is starting to show signs of slowing down.

Rics also suggested the recent flooding has had an impact on both the number of potential home buyers coming into the market and the volume of properties being put up for sale.

The CML said the drop off in lending in January reflects the "usual seasonal dip" seen in the winter months.

Paul Smee, director-general of the CML, said: "January is always a subdued month in the mortgage market but the underlying trend and strong year-on-year growth across all borrower groups indicates a strong start to 2014 continuing the sort of lending levels seen throughout 2013."

The CML also said the Help to Buy scheme now appears to be having an impact on the average deposit a first-time buyer has to put down.

First-time buyers had a deposit of 18% on average in January, edging down from a typical figure of
20% in December.

The state-backed Help to Buy mortgage guarantee scheme kicked off in October last year, with lenders representing more than two-thirds of the market having gradually come on board in the months after launch.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the fact the average deposit for a first-time buyer is 18%, despite many lenders offering deals which require a much lower figure, suggests buyers are trying to access cheaper mortgage rates by building a bigger deposit.

He suggested they are doing this by saving hard and getting help from the "bank of mum and dad", and added: "It doesn't suggest that borrowers are over-extending themselves and taking on more borrowing than they can afford."

The number of mortgages handed out in January to existing homeowners who were moving was also up by one quarter (25%) the same month on a year earlier, the CML reported.

Some 26,800 loans worth £4.9 billion were handed out to home movers in January, which like the first-time buyer figures saw a seasonal drop compared with the previous month.

The people who affect house prices
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First-time buyer lending up 38%

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.


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