New figures have revealed a sharp jump in the number of mortgages taken out by first-time buyers. Council of Mortgage Lenders (CML) data shows that there was a 14% leap in the number of first-time buyer home loans in October after a slow September.
The reports said that if the current improvement in lending continued as expected, "next year should feel a more stable and positive year in the housing and mortgage markets."
First-time buyer loans rise by a fifth in the last year
The CML figures show that a total of 20,000 home loans were advanced to first-time buyers in October 2012, up by a fifth on October 2011. The value of these mortgages reached £2.5billion, up from £2.2billion in September and £2.1billion in October 2011. Loans to first-time buyers accounted for 40% of house purchase lending.
Keith Osborne, editor of whathouse.co.uk, says: "It's encouraging to see that the number of first-time buyer mortgages is rising. There are signs that the cost of higher loan-to-value mortgages is falling as the government's Funding for Lending scheme begins to take effect, and this is making mortgage deals more attractive to new buyers."
The Guardian reports that "homes are more affordable than they were when the housing market was at its peak in 2007, when repaying the capital and interest on a loan cost an average of 25% of a first-time buyer's income. Today, the cost of repayments is typically 20% of income."
Neil Ryner, director of property finance specialists Ryner and Partners, adds: "It's very encouraging to see first-time buyer numbers picking up as the health of the market as a whole depends on them. The issue remains the average loan-to-value, which at 80% is very low for first-time buyers. A huge number of aspiring homeowners will never be able to find this kind of deposit. What we're currently seeing are the transactions of the privileged few."
There were a total of 49,500 house purchase mortgages advanced in October, up from 43,500 in September. The total value of house purchase mortgages was £7.3billion in October, up 11% on the same period in 2011.
The CML's director general, Paul Smee, says: "More positive figures in October, after a slow September, suggest the underlying trend in house purchase lending of modest year-on-year growth will continue. However, usual seasonal factors may act as a counter to lending levels in the coming months."
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