Number of first-time buyers in Wales rises to highest point since 2007
Published: 26 February 2013
The number of loans advanced to first-time buyers in Wales reached its largest yearly total in five years, according to new data released today by the Council of Mortgage Lenders in Wales.
Following a similar trend to the rest of the UK, lending to first-time buyers in Wales increased throughout 2012 and continued into the final quarter of the year.
Loans to home movers remained stable compared to the third quarter while remortgage lending picked-up in the last quarter of the year.
In the fourth quarter, 2,500 loans (worth £240 million) were advanced to first-time buyers in Wales, up by 14% on the third quarter and the last quarter of 2011. With the exception of 2009 when the end of the previous stamp duty holiday boosted activity, it was the most amount of loans advanced in a single quarter since the last quarter of 2007 and the most by value for over four years (second quarter 2008).
First-time buyers in Wales borrowed on average 3.12 times their income in the fourth quarter, lower than the 3.26 times borrowed by their counterparts in the UK.
First-time borrowers in Wales also continued to put down a smaller deposit than the rest of the UK (85% loan to value ratio), while lower house prices, on average, meant that more first-time buyers were exempt from paying stamp duty than in the UK. In the fourth quarter 64% of first-time buyers bought a property for less than £125,000 compared to 39% in the UK.
In total in 2012, 8,700 loans were advanced to first-time buyers in Wales, up by 5% compared to 2011.
Chart 1: Number of loans advanced to first-time buyers in Wales
House purchase activity
The growth in first-time buyers contributed to an increase in house purchase lending in Wales. In total, 6,100 house purchase loans (worth £670 million) were advanced in Wales in the fourth quarter, up by 7% compared to the third quarter and by 3% compared to the last quarter of 2011.
In 2012, 22,300 house purchase loans (worth £2.4 billion) were advanced, an increase of 2% (5% by value) compared to 2011.
Chart 2: House purchase lending in Wales, number of loans advanced, and house purchase lending in Wales as a proportion of the UK total (1 year moving average)
On a quarterly basis, lending to home movers remained unchanged in the fourth quarter. A total of 3,500 loans were advanced in the last quarter of the year (a small increase in value) but down by 8% compared to the fourth quarter of 2011.
Overall in 2012, lending to home movers was less buoyant throughout 2012 than first-time buyer activity. In 2012, there was a small fall in the number of loans advanced to home movers - 13,500 loans were advanced, down from 13,600 in 2011.
Following a similar trend to the UK, remortgage lending increased in the fourth quarter when £330 million was advanced - a 10% increase on the previous quarter but still 20% lower than the fourth quarter of 2011.
Overall, remortgage lending was subdued throughout 2012. A total of £1.35 billion was advanced, down from £1.66 billion during 2011.
Peter Hughes, chair of CML Cymru, commented:
"The boost in the number of first-time buyers in 2012 is encouraging but there are still challenges for the Welsh market. House prices fell marginally in 2012 and real incomes remain low compared to the rest of the UK, but schemes such as NewBuy Cymru and the Funding for Lending scheme should start to have a positive impact on mortgage affordability as the year progresses."
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.
4. Data for the first quarter of 2013 will be released on Tuesday 28 May 2013