First-time buyers come back – even before Help to Buy

The house buying market bounced up in August – with the number of first-time buyers sharply up.

There were 27,000 mortgages lent to first-timers, up 7% on July and 33% compared with August last year. The average loan to value was 81%.

Total home-ownership purchase lending was also up – 7% on July and 15% on August 2012.

Overall buy-to-let lending was down because remortgaging loans to landlords dipped. However, buy-to-let loans for house purchase in August were up 4% on July.

The figures are from the Council of Mortgage Lenders.

David Newnes, director at LSL, called it “a remarkable recovery”.

He said: “First-time buyer numbers are up. House purchase lending, high LTV lending, buy-to-let lending – all up.

“It’s not the just the scale of the recovery that is remarkable. It’s the pace of it. Lending to buyers with small deposits was 60% lower 12 months ago, and first-time buyers were almost entirely absent from the market.
 
“Now, there are more high LTV mortgages available, lenders are much more willing to offer mortgages to buyers with smaller deposits, and confidence has returned.

“It’s helping thousands more people realise their dream of owning a home. Hard-working young people are starting to get a look-in after years of scrimping and saving while their personal finances were ransacked by inflation.
 
“But there is still a long way to go. House purchase lending is still well short of historic levels. It is barely over half what it was in 2007. And potential buyers across the country still can’t afford a low LTV mortgage, which is why Help to Buy is so important.”

Separately, the NAEA said that in September, one in four properties was sold to a first-time buyer. It reported a seasonal upturn in the number of new listings of 9.6%, but said the number of new applicants was down. It said actual house sales were the same as in August, at an average of nine per branch.

However, the NAEA’s report covered the period just before the Help to Buy scheme unexpectedly went live.

Jan Hӱtch, NAEA president, said: “It will be some months before we can assess fully the impact of the Help to Buy mortgage guarantee scheme. Over the past few months we have noticed a drop in the supply of properties, with the view that buyers were holding out until the Help to Buy mortgage guarantee scheme went live in the new year. 

“However, with the scheme now available earlier than anticipated, sellers looking to take advantage of the predicted increase in demand are now beginning to release their properties into the market.”