FIRST-TIME BUYER NUMBERS HIGHEST SINCE 2007

Thanks in part to the Government’s ‘Help to Buy’ initiative, mortgages offered to first-time buyers rose to 28,600 in June, with an accumulative value of £4.2 billion, an increase of 7% over the previous month and the highest number seen in any one month since 2007. This was also an increase of 19% over the same period last year by volume. By value, the figures were up 11% on May’s figure and 27% up on June last year. The Council of Mortgage Lenders (CML), which represents 95% of all residential mortgage lenders, reported that the typical loan size for these borrowers was £123,865 and that, given a typical gross annual income of approximately £37,000 in June; this represents an average of 3.47 times their income. The average age of these borrowers also fell from 30 to 29 years.

With interest rates remaining at their historic low of 0.5% the Bank of England (BoE) appears sanguine about the affordability of these mortgages moving forward, as it calculates that 19.3% of their gross income will be spent on servicing the capital and interest payments on such mortgages.

On the wider front, overall gross mortgage lending across the market in June grew by 6% from the May figures and by 20% on the year to £17.9 billion. There were 66,279 house purchase approvals in July, against 61,651 in the same month last year. This represents a 7.5% increase year-on-year and is the highest monthly figure since 2007.

Whilst the introduction of the Mortgage Market Review (MMR) had slowed the approval process initially, as there was a slight dip in lending volumes seen in April and May, it appears that the bottleneck in those approvals has now been cleared and the mortgage lending recovery is now in place.