Despite first-time buyers still facing a number of stumbling blocks to getting on the property ladder, the latest figures from the Council of Mortgage Lenders (CML) revealed a boost in first-time buyer activity in October.
After a slow September, month-on-month lending to first-time buyers leapt by 14% with 20,000 loans advanced to this group in October.
This figure is also up by 19% year-on-year, and means that loans to first-time buyers accounted for 40% of all house purchase loans in October for the second consecutive month.
First-time buyer loans reached £2.5 billion in October, up on the £2.2 billion in September and the £2.1 billion advanced at the same time last year.
The data also revealed that almost half (49%) of first-time buyers secured loans for homes in the £125,000 and £250,000 price band in October.
Although the percentage of income consumed by initial mortgage interest and capital repayments was unchanged at 20%, this is still more favourable than figure of 25% recorded in 2007.
CML director general Paul Smee said that lending had received a lift from the government’s £80bn Funding for Lending scheme.
“More positive figures in October, after a slow September, suggest that 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,” he said.
“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 the effects of the scheme.”
Smee went on to say that the outlook for the UK’s housing market was bright in 2013.
He said: “If the incremental improvements in house purchase lending that we are currently seeing persist as we expect them to, then next year should feel a more stable and positive year in the housing and mortgage markets.”