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Lowest share of house purchase market for first-time buyers since 2007

Published: 15 June 2010

First-time buyers made up the lowest proportion of house purchase loans since September 2007, according to new data released today by the Council of Mortgage Lenders. They accounted for 35% of all house purchase mortgages, down from 39% in March and 38% in April 2009. The low share of the market shows that getting a mortgage remains problematic for first-time buyers who tend not to have a substantial deposit. 

Overall, there were 40,000 loans advanced for house purchase in April worth £5.7 billion, down from 45,000 (worth £6.3 billion) in March but up from 35,000 (worth £4.5 billion) in April 2009. April's seasonal dip was expected due to the Easter break and the underlying trend is of a gradual recovery in house purchase lending.

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
 
April 2010 40,000 5,700 24,000 2,900
Change from March 2010 -9% -10% -16% -17%
Change from April 2009 +15% +27% -26% -26%

The dip was more strongly felt in remortgage activity, where the trend remains firmly down in contrast to lending for house purchase. There were 24,000 remortgage loans worth £2.9 billion, down 16% (17% in value) from March and 26% lower (both in volume and value) than a year ago. With expectations for rates to remain low for the immediate future, and lending criteria still tight, remortgaging is likely to remain muted. 

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

April 2010 14,300 1,700 75% 3.16 13.5%
Change from March 2010 -17% -15% 76% 3.22 13.4%
Change from April 2009 +8% +21% 75% 3.04 15%

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

April 2010

26,100

4,000

67%

2.84

9.6%

Change from March 2010

-5%

-7%

68%

2.86

9.7%

Change from April 2009

+19%

+29%

69%

2.70

11.4%

Although there has been some increase this year in the number of higher loan-to-value products available, this has not yet translated into a sustained increase in loans to borrowers with lower deposits. The tentative signs of easing experienced in March returned to their previous levels in April, with the typical first-time buyer borrowing 75% and the typical home mover 67% of their property's value. 

Commenting on today's data, Michael Coogan, director general of the CML, said:

"Easter traditionally causes a dampening of lending levels and this year was no exception. First-time buyers were particularly affected, perhaps because of the alteration to stamp duty, and in anticipation of the changes arising from the economic and political uncertainty of recent months.

"Lending for house purchase still looks modestly positive compared to 2009. But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML/Banksearch.

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.

4. The May RMS data will be released on Monday 12 July 2010.

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