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First-time buyer numbers increased in February

Published: 16 April 2012

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."

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 11.2 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.

4. The March 2012 data will be released on Wednesday 16 May 2012.

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