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| First-time buyer mortgage lending rises 14%, says CML | First-time buyer mortgage lending rises 14%, says CML |
| (35 minutes later) | |
| The number of mortgages taken out by first-time buyers leapt by 14% in October following a quiet September, according to figures from the Council of Mortgage Lenders (CML). | The number of mortgages taken out by first-time buyers leapt by 14% in October following a quiet September, according to figures from the Council of Mortgage Lenders (CML). |
| It said if the current gradual improvement in house purchase lending continued as expected, "next year should feel a more stable and positive year in the housing and mortgage markets". | It said if the current gradual improvement in house purchase lending continued as expected, "next year should feel a more stable and positive year in the housing and mortgage markets". |
| A total of 20,000 home loans were advanced to those taking their first step on the property ladder, a sharp rise on the previous month and up by a fifth on October 2011. | A total of 20,000 home loans were advanced to those taking their first step on the property ladder, a sharp rise on the previous month and up by a fifth on October 2011. |
| The value of those loans reached £2.5bn, up from £2.2bn in September and £2.1bn in October 2011. For the second month running loans to first-time buyers accounted for 40% of house purchase lending. | The value of those loans reached £2.5bn, up from £2.2bn in September and £2.1bn in October 2011. For the second month running loans to first-time buyers accounted for 40% of house purchase lending. |
| The increase follows the introduction of the government's Funding for Lending scheme in early August, which has led to some falls in first-time buyer mortgage rates. | The increase follows the introduction of the government's Funding for Lending scheme in early August, which has led to some falls in first-time buyer mortgage rates. |
| However, the CML's data shows first-time buyers are still putting down an average deposit of 20%, and the cost of borrowing is still lowest for those with the largest deposits. | |
| Homes are more affordable than they were when the housing market was at its peak in 2007, when repaying the capital and interest on a loan cost an average of 25% of a first-time buyer's income. Today, the cost of repayments is typically 20% of income. | Homes are more affordable than they were when the housing market was at its peak in 2007, when repaying the capital and interest on a loan cost an average of 25% of a first-time buyer's income. Today, the cost of repayments is typically 20% of income. |
| The 2011 census revealed how the mortgage drought and high house prices have changed the face of the housing market, with the number of people in private rented accommodation rising from 9% to 15% over the decade from 2001. | The 2011 census revealed how the mortgage drought and high house prices have changed the face of the housing market, with the number of people in private rented accommodation rising from 9% to 15% over the decade from 2001. |
| Neil Ryner, director of property finance specialists Ryner and Partners, said: "It's very encouraging to see first-time buyer numbers picking up as the health of the market as a whole depends on them. | Neil Ryner, director of property finance specialists Ryner and Partners, said: "It's very encouraging to see first-time buyer numbers picking up as the health of the market as a whole depends on them. |
| "The issue remains the average loan-to-value, which at 80% is very low for first-time buyers. A huge number of aspiring homeowners will never be able to find this kind of deposit. What we're currently seeing are the transactions of the privileged few." | "The issue remains the average loan-to-value, which at 80% is very low for first-time buyers. A huge number of aspiring homeowners will never be able to find this kind of deposit. What we're currently seeing are the transactions of the privileged few." |
| The CML's figures show 49,500 loans were advanced for house purchases over October, up from 43,500 in September. The value of house purchase loans totalled £7.3bn in October, up 11% on September and the same period in 2011. | The CML's figures show 49,500 loans were advanced for house purchases over October, up from 43,500 in September. The value of house purchase loans totalled £7.3bn in October, up 11% on September and the same period in 2011. |
| Remortgaging activity was also up month-on-month, with 26,900 borrowers switching to a new lender. However, this remains 13.8% below the figure for October 2011, suggesting homeowners are either opting to stay on their lender's standard variable rate or finding they are unable to access some of the low rates targeted at those with 40% of equity in their property. | Remortgaging activity was also up month-on-month, with 26,900 borrowers switching to a new lender. However, this remains 13.8% below the figure for October 2011, suggesting homeowners are either opting to stay on their lender's standard variable rate or finding they are unable to access some of the low rates targeted at those with 40% of equity in their property. |
| The CML's director general, Paul Smee, said: "More positive figures in October, after a slow September, suggest the underlying trend in house purchase lending of modest year-on-year growth will continue. However, usual seasonal factors may act as a counter to lending levels in the coming months. | The CML's director general, Paul Smee, said: "More positive figures in October, after a slow September, suggest the underlying trend in house purchase lending of modest year-on-year growth will continue. However, usual seasonal factors may act as a counter to lending levels in the coming months. |
| "An up-tick in remortgage lending may be an early sign of a small positive impact of the Funding for Lending scheme, but it's still too soon to evaluate its effects." | "An up-tick in remortgage lending may be an early sign of a small positive impact of the Funding for Lending scheme, but it's still too soon to evaluate its effects." |
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