First Time Buyers coming back to the UK housing market

First Time Buyers increase by a fifth

The latest figures from the Council of Mortgage Lenders (CML) show that First Time Buyers are finding it easier to get onto the property ladder after their number surged by a fifth in March. A total of 19,100 loans worth £2.4 billion were lent to borrowers buying their first home, up from 15,900 loans in February but down on the 24,400 loans advanced in March 2012, although that was the month when the stamp duty holiday for first time buyers ended and there was a surge in activity as a result.

Demand for property highest for three and a half years

At the same time, the Royal Institute of Chartered Surveyors (RICS) says demand for residential property is at its highest level since November 2009 and that enquiries from potential new buyers are rising at the fastest rate for three years as lending criteria gradually becomes more generous to first time buyers. In a statement, RICS commented: “The increased interest in the sales market reflects in part, as we have noted previously, the success of the Funding for Lending Scheme in both bringing down mortgage rates and encouraging banks to lend higher multiples. However the latest jump in enquiries strongly suggests that the Help to Buy proposition is attracting interest even if the mortgage guarantee element of the product is not due to come into effect until next year.”

Increase in ‘90% mortgages’

The average loan to value (LTV) ratio for first time buyers remained stable at 80% (meaning that the borrower needs to put down a deposit of 20% of the purchase price). However, there has been an increase in the proportion of first time buyers taking out mortgage loans with a deposit of 10% or less (i.e. obtaining mortgages with LTV ratios of more than 90%). In the first quarter of 2013, 25% of first time buyers put down a deposit at 10% or less – an increase from 20% in the first quarter 2012.

CML director general Paul Smee said: “First-time buyer activity in the first quarter was nearly at the same level as last year, when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.”

The Funding for Lending and Help to Buy schemes

Mortgages rates have reduced significantly and the availability of higher LTV mortgages has increased since the Government launched the Funding for Lending Scheme (FLS) last August. The FLS gives banks access to cheap finance in order to lend on to borrowers, while the newly launched Help to Buy scheme enables people to purchase a New Build property with a deposit of just 5%.

Mr Smee added: “More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years – a sign that lenders are open for business and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.”

What should you do?

If you, your family or friends are first time buyers and want to know the best rates and the most favourable lending criteria in the mortgage market right now, why not contact Marchwood IFA for a chat about your options? Unlike individual high street banks and building societies, we can advise you on the right mortgage for you from the whole of the market. Finding the right mortgage product is one thing but getting a mortgage offer is altogether different. And this is where we really add value. Our sole objective is to get you what you want in the most painless way possible. When dealing with the banks this is not always straightforward, so we collect everything required from you and liaise on your behalf with the lender until the mortgage offer is produced and you can move into your new home. Whether you are buying a new home or an investment property or wish to refinance an existing mortgage, we have the skills, tools and experience to help.

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