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First-time buyers continue to make up majority of housing market in Northern Ireland

Published: 24 August 2012

First-time buyers in Northern Ireland accounted for 58% of all purchase loans in the second quarter of 2012, remaining well above the UK average, according to new figures released today by the Council of Mortgage Lenders in Northern Ireland. First-time buyers claimed an additional 1% of the market from the first quarter of 2012 and the largest proportion of the market since 2001.

Northern Ireland remains the only part of the UK where first-time buyers represent more than 50% of the market, with first-time buyers in the UK overall making up 38% of the market in the second quarter of 2012.

First-time buyers as a percentage of all house purchase loans, UK and Northern Ireland

Chart 1 - Northern Ireland 24-8-2012

Source: CML regulated mortgage survey

Bucking the trend in other areas of the UK, the proportion of income consumed by initial mortgage payments for first-time buyers in Northern Ireland fell in the second quarter. Borrowers in Northern Ireland spent 19.1% of their income on their mortgage payments in this quarter compared to 19.5% in the previous quarter. This represented the lowest figure since the statistic was first recorded in 2005.

The number of loans advanced to first-time buyers fell slightly compared to the previous quarter, but remained consistent with the second quarter of 2011. Overall, 1,100 loans (worth £80 million) were advanced to first-time buyers in the second quarter of 2012, compared to 1,200 loans (worth £100 million) in the first quarter of 2012. While the total number of loans advanced to first-time buyers remained unchanged compared to this time last year, the value of the loans fell by £10 million.

For home movers, the number of loans advanced was unchanged compared to the first quarter of 2012. Overall, 800 loans were taken out by home movers at a total value of £90 million. This marked a 20% fall compared to the second quarter of 2011 when 1,000 loans (worth £110 million) were advanced.

Home movers in Northern Ireland in the second quarter of 2012, were advanced an average of £92,000, the lowest average advance since the third quarter of 2005.

Number of loans for house purchase year-on-year % change UK v Northern Ireland

Chart 2 - Northern Ireland 24-8-2012

Source: CML regulated mortgage survey

As a result of a drop in lending to first-time buyers and with home mover lending remaining unchanged, house purchase lending fell in the second quarter. Overall, there were 1,900 loans worth £170 million taken out for house purchase in Northern Ireland in the second quarter of 2012, down from 2,100 loans worth £190 million in the first quarter of this year, and 2,100 loans worth £210 million in the second quarter of 2011.

In contrast, the UK as a whole recorded an increase in the number of loans for house purchase with a 6% increase on the previous quarter and a 4% rise compared to the same quarter last year.

Number of loans advanced for remortgage year-on-year % change UK v Northern Ireland

Chart 3 - Northern Ireland 24-8-2012

Source: CML regulated mortgage survey

In the second quarter of the year, remortgaging in Northern Ireland decreased. 1,300 loans were taken out for remortgage compared to 1,500 in the previous quarter and 1,800 in the same period last year. By value, £120 million was advanced to borrowers looking to remortgage, down from £140 million in the first quarter of 2012 and £170 million in the second quarter of 2011.

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

“The proportion of first-time buyers continued to rise compared to the rest of the market in Northern Ireland and is likely to be linked to the movement in house prices and affordability.

“It’s conceivable that the combination of a rapid deterioration in affordability and the subsequent improvement as house prices fell, has released a pent-up demand from first-time buyers unable to buy when prices were higher.

“The housing market in Northern Ireland was less resilient than in the UK overall in the first half of this year and we will be watching future trends closely for signs that confidence is returning to the market.”

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. Data for the third quarter of 2012 will be released on Monday 26 November 2012.

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