First-time buyer numbers increased in February

By Bridging Loan Directory -

 

Lending to both first-time buyers and home movers increased in February with first-time buyers taking the bigger increase, according to figures released today from the Council of Mortgage Lenders. 14,100 loans worth £1.7 billion were taken out by first-time buyers, up 8% by number and 6% by value from January and up 18% by number and 21% by value on last February.

Home movers took out 22,500 loans worth £3.7 billion, a 2% increase in number and a 3% increase in value from January and a 16% increase in number and 19% increase in value from February 2011.

Table 1: Loans for house purchase and remortgage

Number of
house purchase
loans
Value of house
purchase loans
£m
Number of
remortgage
loans
Value of
remortgage
loans, £m
February 2012 36,600 5,400 25,500 3,300
Change from January 2012 4% 2% -3% -6%
Change from February 2011 17% 20% -13% -6%

House purchase lending rose in February. 36,600 loans (worth £5.4 billion) were taken out, up 4% by number and 2% by value from January and up 17% by number and 20% by value from February last year.

Remortgaging continued to decrease in February. £3.3 billion was advanced, a 6% fall compared both to January 2012 and February 2011.

Table 2: First-time buyers, lending and affordability

Number of
loans
Value of
loans
£m
Average
loan to value
Average
income multiple
Proportion of
income spent on
interest payments
February 2012 14,100 1,700 80% 3.23 12.5%
Change from January 2012 8% 6% 80% 3.19 12.1%
Change from February 2011 18% 21% 79% 3.13 12.7%

For the first time since April 2011, there was an increase in the proportion of income first-time buyers spent on mortgage interest payments, from 12.1% in January to 12.5% in February. This is likely to reflect a combination of factors including an increase in average first-time buyer income multiples (from 3.19 to 3.23) and a modest increase in some borrowing rates. This still leaves mortgages for first-time buyers much more affordable than as recently as 2008, when first-time buyers on average spent 19.6% of their income on mortgage interest payments. First-time buyers borrowed on average 80% of their property’s value in February, unchanged in over a year.

Table 3: Home movers, lending and affordability

  Number of
loans
Value of
loans
£m
Average
loan to value
Average
income multiple
Proportion of
income spent on
interest payments
February 2012 22,500 3,700 70% 2.91 9.8%
Change from January 2012 2% 3% 70% 2.91 9.6%
Change from February 2011 16% 19% 68% 2.87 9.7%

Since the summer of 2011, more than 95% of first-time buyers have taken out repayment loans and February’s proportion was 96%, unchanged from January. Repayment loans to new home movers and remortgagors also increased in February from 81% to 82% for home movers and from 76% to 77% for those remortgaging.

51% of first-time buyers bought properties priced between £125,000 and £250,000 in February, up from 49% in January. February was the last full month of the stamp duty concession although next month’s data is expected to bring a further rise in first-time buyer numbers as they moved to beat the 24 March deadline.

CML director general Paul Smee said:

“It is encouraging to see the continuing year-on-year improvement in house purchase lending. However it is not yet clear whether the end of the stamp duty concession will lead to a falling off in first-time buyer numbers and how much this may be offset by the government’s NewBuy scheme, available to all buying a new build property.”