According to new figures from the Council of Mortgage Lenders (CML), first-time buyers (FTB) were loaned £5.5bn in June, the highest amount for nine years. That total was 28% up on May and 25% more than June the previous year. The £5.5bn total comprised 34,300 loans, up 24% on May and a 17% rise year-on-year. Meanwhile, the number of mortgages given to FTB was the highest since August 2007. It contradicted many predictions that lending could be lower just before and after the EU referendum because of the possible insecurity the vote would cause within the UK economy.
Help to Buy and the stamp duty increase in April are thought to be two of the main reasons behind the higher lending amount given to FTB. Stamp duty was raised with the aim of creating a more level playing field within the mortgage market by slowing down the rapidly increasing buy-to-let market. That would appear to be working, with buy-to-let mortgages down 15% on June 2015 while lending has become more favourable to FTB. June was also the third month running where loans to FTB were more than those given to borrowers already on the property ladder.
The monthly lending trends survey by CML also revealed that the average deposit needed to buy a home fell from 20% of the purchase price in June last year to 16% in June this year. It’s perhaps a sign that, with increasing competition, lenders are being less strict with their criteria for first-time buyers.
Other figures show the average income multiple for FTB in June this year was 3.55. That’s up slightly from 3.51 in May and a rise from 3.40 from June 2015. The average loan to value for FTB was 83.6%, which is down from 84.6% in May but up from 80.2% in June 2015. The average loan for FTB was £135,400.
As the buy-to-let market shrinks, it potentially means less competition for first-time buyers who can often go after the same type of property. With the Bank of England halving its base interest rate from 0.5% to 0.25%, it’s even better news for those first-time buyers looking to get on to the property ladder.
Paul Smee, director general at CML, says that these figures are a sign that confidence was still high in many areas of the property market despite Brexit, especially for FTB: “First-time buyers are continuing to be the driving force behind house purchase lending. We believe that the mortgage market is resilient, well-capitalised and open for business and we believe this will continue for the foreseeable future.”
If you’re a first-time buyer looking to get on the property ladder then take a look at the wide range of stunning properties available to purchase through Help to Buy. You could buy any one of these new homes with as little as a 5% deposit.