First-time buyers support the property market

In a recent report, The Council of Mortgage Lenders (CML) said the market was “more favourable” for the first-time borrower. It was disclosed that 42% of home loans in January this year were to those first-time buyers.

This high percentage has been maintained for the last three months and represents a higher percentage than the average rate for this type of borrower for the last ten years.

Typically, first-time buyers have made up approximately 33% of the market place over the past ten years; however, prior to 2002 that figure was 50%.

Whilst mortgage lending in the UK in January was down on December 2012, it was
higher by 11% than in January 2012. There were 38,300 transactions in the first month of this year.

One of the major factors in this increase in lending is the effect that the coalition government’s Funding for Lending Scheme (FLS) has had on the marketplace. This scheme has made cheap funds available to lenders and mortgage providers and has managed to push down borrowing costs for the first-time buyer and also increased competition in the lending market. As a result of this, lenders are scrambling to attract business and reducing the rates and margins they offer borrowers.

With base rates at an all-time low of 0.5%, as they have been now for over four years, this is an ideal time for first-time buyers to enter the property market.

Whilst this trend is encouraging news for first-time buyers, they still typically have to find deposits of 20% or more and until this financial barrier is reduced, many hopeful home-owners are going to be barred from the market. The Government’s new ‘Help to Buy’ scheme may be beneficial. UK property prices nationally rose by 1.0% over the past year, but there were, as usual, dramatic regional variations, with London prices rising by 7.1%, whist values in the North West declined by 4.2%.

Readers might also be interested in: Government gives boost to housing market with Help to Buy scheme…

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