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First-time buyer activity up again in March

Published: 14 May 2013

First-time buyer activity remained strong in March with the number of first-time buyers increasing by 20% according to data published today by the Council of Mortgage Lenders.

This increase, as well as small rise in the number of home movers, contributed to a monthly jump in house purchase lending. Remortgage lending also increased compared to February but remained flat over the first quarter.

First-time buyers

A total of 19,100 loans (worth £2.4 billion) were advanced to first-time buyers in March, up from 15,900 loans in February but down on the 24,400 loans advanced in March last year. However, March 2012 marked the end of the first-time buyer stamp duty holiday and resulted in a significant jump in activity, making meaningful year-on-year comparisons difficult.

Despite the spike in March last year, first-time buyer lending activity over the first quarter of 2013 fell only marginally shy of activity in the first three months of 2012. Overall, 50,900 loans were advanced to first-time buyers in the first quarter of this year, compared to 51,200 loans in the first quarter of 2012.

While the loan-to-value ratio for first-time buyers remained at 80%, there has been a gradual increase in the proportion of first-time buyers taking out loans with a deposit of 10% or less. In the first quarter of the year 1 in 4 first-time buyers put down a deposit at 10% or less - up from 1 in 5 in the first quarter of last year. First-time buyers also typically borrowed a slightly larger amount in March than in February, both in absolute terms and relative to their income.

First-time buyers also continued to account for an increasing proportion of all house purchase loans - increasing to 45% in March from 43% in February.

Table 1: 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 Proportion of income spent on capital and interest payments
19,100 2,400 80% 3.24 12.2% 19.3%
Change from
February 2013
20.1% 20.0% 80% 3.21 12.5% 19.5%
Change from
March 2012
-21.7% -22.6% 80% 3.34 13.1% 19.8%

Home movers

Contributing to the rise in house purchase loans, lending to home movers increased in March. A total of 22,900 loans (worth £3.8 billion) were advanced to home movers in March, an increase of 11% from February.

On a quarterly basis, a total of 65,300 loans were advanced to home movers, down from 86,000 in the fourth quarter of 2012 and 71,600 loans in the first quarter of last year.

Table 2: 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 Proportion of income spent on capital and interest payments
22,900 3,800 70% 2.89 9.3% 18.4%
Change from
February 2013
10.6% 11.8% 70% 2.87 9.4% 18.7%
Change from
March 2012
-17.3% -13.6% 70% 2.91 9.9% 19.2%

House purchase lending

In line with the expected seasonal pattern, house purchase lending picked up in March compared to the first two months of the year.

A total of 42,000 house purchase loans were advanced in March (worth £6.2 billion) marking a 15% rise on February lending. As expected, house purchase lending in March was down (19%) on March 2012 but this was again due to distortions around the end of the stamp duty concession in March 2012.

On a quarterly basis, 116,200 loans were advanced for house purchase in the first quarter (worth £17.2 billion), a 21% fall compared to the fourth quarter of 2012 and down by 5% compared to the first quarter of last year.

Table 3: 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
42,000 6,200 23,300 3,100
Change from
February 2013
14.8% 17.0% 14.2% 14.8%
Change from
March 2012
-19.2% -17.3% -18.5% -13.9%

Remortgage lending

Remortgage lending increased by 15% in March, but remains low compared to historical levels, and was 14% lower than March last year.

In the first quarter overall, £9 billion was advanced to borrowers remortgaging, a 10% fall compared to the fourth quarter of 2012 and down by 19% compared to the first quarter last year.

Lending via intermediaries

Intermediaries increased their market share in the first quarter among all borrower types. 52% of remortgage borrowers took out their loan via an intermediary, compared to 48% in the fourth quarter of 2012, while 48% of home movers and 55% of first-time buyers went via an intermediary (up from 45% and 54% respectively in the fourth quarter).

Commenting on the data, CML director general Paul Smee said:

"First-time buyer activity in the first quarter was nearly at the same level as last year – when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.

"More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years - a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder."

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. The April 2013 data will be released on Thursday 13 June 2013.

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