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First-time buyer mortgages highest in five years | First-time buyer mortgages highest in five years |
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The number of first-time buyers entering the housing market reached 216,000 in 2012, the highest in five years and a further sign that the mortgage drought for new borrowers is beginning to ease. | The number of first-time buyers entering the housing market reached 216,000 in 2012, the highest in five years and a further sign that the mortgage drought for new borrowers is beginning to ease. |
Figures from the Council of Mortgage Lenders (CML) showed the number of new first-time buyer loans increased by 12% year-on-year to exceed 200,000 for the first time since 2007. The overall number of mortgages was also at its highest since 2007, with a total of 540,200 worth £80.9bn advanced over the year. | Figures from the Council of Mortgage Lenders (CML) showed the number of new first-time buyer loans increased by 12% year-on-year to exceed 200,000 for the first time since 2007. The overall number of mortgages was also at its highest since 2007, with a total of 540,200 worth £80.9bn advanced over the year. |
House prices peaked in 2007 in the run-up to the collapse of Northern Rock. This was followed by a downturn in prices and the credit crunch, which saw lenders reduce maximum loan-to-values on mortgages and tighten their borrowing criteria. | House prices peaked in 2007 in the run-up to the collapse of Northern Rock. This was followed by a downturn in prices and the credit crunch, which saw lenders reduce maximum loan-to-values on mortgages and tighten their borrowing criteria. |
The CML's data showed that lending for first-time buyers strengthened towards the end of 2012, following the introduction of the government's Funding for Lending scheme in August, which made cheap funds available to banks and building societies. | The CML's data showed that lending for first-time buyers strengthened towards the end of 2012, following the introduction of the government's Funding for Lending scheme in August, which made cheap funds available to banks and building societies. |
A total of 60,500 loans worth £7.6bn were advanced to first-time buyers in the last quarter of 2012, an 8% increase from the third quarter and up by 14% compared to the fourth quarter of 2011. | A total of 60,500 loans worth £7.6bn were advanced to first-time buyers in the last quarter of 2012, an 8% increase from the third quarter and up by 14% compared to the fourth quarter of 2011. |
New buyers accounted for 42% of all house purchase lending, above the 38% seen through the rest of the year. | New buyers accounted for 42% of all house purchase lending, above the 38% seen through the rest of the year. |
The number of high loan-to-value mortgages on offer to new buyers increased during the year, and the CML said there was "a modest but discernible increase" in lending at these levels. | The number of high loan-to-value mortgages on offer to new buyers increased during the year, and the CML said there was "a modest but discernible increase" in lending at these levels. |
The average loan-to-value ratio stayed at 80%, where it has been for two years, but the CML said this masked the fact that one in 40 first-time buyers took out a 95% mortgage in the last quarter of 2012, compared with fewer than one in 100 a year earlier. Around one in five first-time buyers borrowed 90% or more. | The average loan-to-value ratio stayed at 80%, where it has been for two years, but the CML said this masked the fact that one in 40 first-time buyers took out a 95% mortgage in the last quarter of 2012, compared with fewer than one in 100 a year earlier. Around one in five first-time buyers borrowed 90% or more. |
The number of first-time buyer mortgages was down 12% in December on the previous month, at 19,100, but a fall is typical at the end of the year. | The number of first-time buyer mortgages was down 12% in December on the previous month, at 19,100, but a fall is typical at the end of the year. |
Lending to home movers dropped by 15% to 25,900 loans, a 9% decrease on December 2011. | Lending to home movers dropped by 15% to 25,900 loans, a 9% decrease on December 2011. |
"Despite the seasonal dip in lending that we normally see in December, the underlying trend for year-on-year increases in house purchase activity continued in 2012," said the CML's director general, Paul Smee. | "Despite the seasonal dip in lending that we normally see in December, the underlying trend for year-on-year increases in house purchase activity continued in 2012," said the CML's director general, Paul Smee. |
"First-time buyers, in particular, have benefitted from the effects of better funding conditions and the Funding for Lending scheme, with the number of new people moving into home-ownership in 2012 reaching the highest level for five years. This, along with other factors, confirms that lenders really are open for business." | "First-time buyers, in particular, have benefitted from the effects of better funding conditions and the Funding for Lending scheme, with the number of new people moving into home-ownership in 2012 reaching the highest level for five years. This, along with other factors, confirms that lenders really are open for business." |
As well as an increase in the number of first-time buyer mortgages available, with Barclays amongst those re-entering the market with its Family Springboard mortgage, there has been a flurry of new best-buy deals for borrowers with larger deposits. | As well as an increase in the number of first-time buyer mortgages available, with Barclays amongst those re-entering the market with its Family Springboard mortgage, there has been a flurry of new best-buy deals for borrowers with larger deposits. |
Recent weeks have seen lenders battle to offer the lowest rates, with First Direct offering the lowest ever five-year fix at 2.69% and Chelsea building society the lowest two-year deal at 1.89%. | Recent weeks have seen lenders battle to offer the lowest rates, with First Direct offering the lowest ever five-year fix at 2.69% and Chelsea building society the lowest two-year deal at 1.89%. |
Mark Harris, chief executive of mortgage broker SPF Private Clients, said it was "not too early to call the end of the mortgage impasse". | Mark Harris, chief executive of mortgage broker SPF Private Clients, said it was "not too early to call the end of the mortgage impasse". |
"The cost of borrowing has dropped across the market, with rates on higher loan-to-values also falling. This is being reflected in the growing number of first-time buyers, which is significant for the health of the housing market as they really are its lifeblood," he said. | "The cost of borrowing has dropped across the market, with rates on higher loan-to-values also falling. This is being reflected in the growing number of first-time buyers, which is significant for the health of the housing market as they really are its lifeblood," he said. |
"Let's not get ahead of ourselves – the mortgage market is still constrained when you compare it with what it was at the height of the housing boom, but it is finally showing encouraging signs of improvement." | "Let's not get ahead of ourselves – the mortgage market is still constrained when you compare it with what it was at the height of the housing boom, but it is finally showing encouraging signs of improvement." |
Separate figures from the Office for National Statistics showed that first-time buyers still faced an uphill struggle to afford a home, with prices rising by 3.3% over the year to December 2012. | Separate figures from the Office for National Statistics showed that first-time buyers still faced an uphill struggle to afford a home, with prices rising by 3.3% over the year to December 2012. |
The ONS data put the average UK house price at £233,000. This was highest in England, at £242,000; in Wales it stood at £158,000; in Northern Ireland £130,000 and in Scotland £179,000. | The ONS data put the average UK house price at £233,000. This was highest in England, at £242,000; in Wales it stood at £158,000; in Northern Ireland £130,000 and in Scotland £179,000. |
Top mortgages | Top mortgages |
Chelsea Building Society | Chelsea Building Society |
Yorkshire BS | |
Nationwide | Nationwide |
Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |