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Northern Ireland sees highest yearly total of first-time buyers in 5 years

26 Feb 13

Northern Ireland sees highest yearly total of first-time buyers in 5 years

Lending to first-time buyers increased in the final quarter of the year in Northern Ireland, contributing to the largest number of loans to first time buyers in a single year since 2007, according to new data released today by the Council of Mortgage Lenders in Northern Ireland.

A total of 5,100 first-time buyers entered the market in 2012, up from 4,700 in 2011 - an increase of 9%.

On a quarterly basis, lending to home movers fell in the fourth quarter compared to the previous quarter while remortgage lending picked up slightly.

First-time buyers

A total of 1,400 loans were advanced to first-time buyers in the fourth quarter in Northern Ireland, an increase of 8% on the third quarter and the same as the last quarter of 2011.

First-time buyers in Northern Ireland typically borrowed 80% of the property's value, slightly lower than in the third quarter when first-time buyers typically borrowed 82% of the property's value, and on par with the rest of the UK.

Other measures of first time buyer affordability remain favourable compared to the UK as a whole. First-time buyers in Northern Ireland borrowed an average of 2.89 times their income, compared to 3.26 in the UK. While mortgage payments typically consumed 19.1% of their income, remaining lower than 20.1% in the UK.

The vast majority (79%) of first-time buyers in Northern Ireland continued to buy properties valued at less than £125,000, compared to less than 40% in the UK.

While there was an increase in the number of first time buyers in 2012, a fall in the average amount borrowed led to a fall in the value of lending to first-time buyers in the year - £380 million down from £410 million in 2011.

Chart 1: Number of loans advanced to first-time buyers in Northern Ireland

Number of loans advanced to first-time buyers in Northern Ireland

Source: CML regulated mortgage survey 

Home movers

In the fourth quarter, 900 loans were advanced to home movers in Northern Ireland, down from 1,000 in the third quarter and 1,100 in the fourth quarter of 2011.

Year-on-year, the number of loans advanced to home movers fell by 10% in 2012 compared to 2011, 3,600 loans down from 4,000 in 2011. Lending to home movers was weaker in Northern Ireland than in the UK in 2012, possibly due to the steeper house price falls in Northern Ireland than the UK and the subsequent reduction in housing equity for existing homeowners (decreasing the deposit available to them to put towards another property).

Chart 2: House purchase lending in Northern Ireland, number of loans advanced, and house purchase lending in Northern Ireland as a proportion of the UK total (1 year moving average)


House purchase lending in Northern Ireland in NI

Source: CML regulated mortgage survey 

Loans for house purchase

2,300 loans were advanced for house purchase in the fourth quarter, unchanged compared to the third quarter but a fall on the last quarter of 2011 when 2,500 loans were advanced.

In the year overall, the increase in lending to first-time buyers was offset by the fall in lending to home movers. In total, 8,600 loans (worth £780 million) were advanced for house purchase in 2012, down from 8,800 loans (£860 million) in 2011. This was weaker than the UK overall where house purchase activity increased by 7%.

Remortgage lending 

Remortgage lending picked up slightly in the fourth quarter when £110 million was advanced (up from £100 million in the third quarter), but down by 31% on the fourth quarter of 2011.

Matching the trend in the rest of the UK, remortgage lending was subdued in 2012 in Northern Ireland. A total of £470 million was advanced in 2012, a 29% fall compared to 2011.

Derek Wilson, chair of the CML in Northern Ireland, commented:

 "The increase in first-time buyers across 2012 is encouraging but the fall in overall house purchase lending suggests that there are still challenges for the market in Northern Ireland.

"First-time buyers are still finding mortgage affordability more favourable than the UK overall, which we hope will have a flow on effect to the rest of the market in the near future."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.

4. Data for the first quarter of 2013 will be released on Tuesday 28 May 2013

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