Mortgages for first-time buyers at 5-year high...

The Council of Mortgage Lenders (CML) has reported that loans offered to first time buyers reached a five and-a-half year high in May this year. This represents a 42% increase from the same month last year.

With 25,000 people taking out these loans, this is the highest number of first-time borrowers since December 2007. Paul Smee, the Director General of the CML, was quoted as saying: “Both the borrowing appetite of first-time buyers, and the availability of attractive mortgages for them, have improved markedly since a year ago.”

Whilst these are encouraging figures, the overall level of activity in the housing market remains at only half the level it was prior to the recent economic crisis. Another caveat to this data was the fact that May 2012 had a very low uptake of mortgages, as a result of the changes in stamp duty thresholds made in March 2012, prompting many buyers to bring forward their house purchases to take advantage of the lower tax levels at that time.

The Government’s two initiatives, ‘Funding for Lending Scheme’ (FLS), which was launched in August 2012 and ‘Help to Buy’ (HTB), launched in April 2013, have been credited with helping to make funds more available for potential home buyers.

FLS has made additional funds from the Bank of England available to building societies and banks at cheaper rates, on the proviso that they in turn make these funds available to businesses and individuals.

Meanwhile, HTB has specifically helped first-time buyers, as the Government offers those buyers a 20% equity loan, provided they can raise a 5% deposit.

Not only first-time buyers benefited, however, as the number of people re-mortgaging also increased by 18.7% compared with the same time last year.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

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