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First-time buyer and buy-to-let lending up by more than 10%

News

Published: 19 February 2013 | Author: Bernard Clarke

Data we have just published shows that lending to all types of buyer increased in 2012.

As Chart One shows, 2012 is the first year since the financial crisis in which the number of loans advanced to both first-time buyers and buy-to-let investors increased by more than 10%. The only other post-crunch year in which lending to both types of borrower increased was 2010. But then the number of loans to each grew by just 1%.

Chart One: House purchase lending by type of borrower, change year-on-year

News & Views issue 3-2013 house purchase lending chart

Source: CML Research

Our data show that lenders advanced more than 216,000 loans to first-time buyers last year. That was the highest annual total in five years, 13% more than in 2011, and the first time since 2007 that the number of first-time buyer loans has exceeded 200,000.

As the table shows, different types of borrower have experienced contrasting fortunes since 2008, the year in which the number of loans advanced fell by around 50%, with first-time buyers, existing owner-occupiers and buy-to-let investors all similarly affected.

From 2009 onwards, the number of loans taken out by first-time buyers and existing owner-occupiers stabilised. Then, last year, we saw a pick-up in the number of mortgages advanced to first-time buyers. 

In the buy-to-let sector, meanwhile, the pattern has been a little different. The decline in lending in 2008 was followed by another year of sharp contraction in 2009, before the market stabilised in 2010. Each of the last two years, however, has seen an expansion in buy-to-let lending, reflecting an improvement in both mortgage availability and the strength of demand in the rental sector.

This year, we expect the positive trends in lending to continue. The Bank of England’s funding for lending (FLS) scheme should continue to improve mortgage availability for both first-time buyers and movers. The FLS will also benefit the buy-to-let sector, which will continue to be buoyed by rental demand.