Struggle may be over for first-time buyers

First time buyers have traditionally faced several hurdles when it comes to getting on the first rung of the property ladder, from difficulties raising the average 20% deposit to securing a mortgage with a high loan-to-value ratio.

Despite the fact that recent figures have revealed that first-time buyers are still turning to the Bank of Mum and Dad for a leg up the property ladder, with parents supporting their offspring to the average tune of £17,000, it seems that the future is now definitely bright for a generation of young would-be buyers.

First-time buyer numbers on the increase

Recent figures have revealed that the number of first-time buyers in the first half of 2013 is 19% higher when compared to the same period last year – indicating that there are improved prospects for first-time buyers within the UK’s housing market.

120,000 first time buyers snapped up a property in the first six months of the year, up from a figure of 101,000 recorded in 2012, and the highest half-year figures recorded since before the start of the financial crisis (181,500).

The figures from the Halifax First Time Buyer Review also reveal that first-time buyers are taking up an increasing share of the property purchase market, with this figure rising from 40% in 2012 to 44% in 2013.

And what has sparked this surge in first-time buyer activity? According to Craig McKinlay, Mortgages Director at Halifax, government initiatives have played a large part.

“The increased availability and reduced pricing of higher loan-to-value mortgages introduced over the past year or so have clearly contributed to the number of first time buyers rising to a six year high,” he said.

“Government schemes, such as New Buy and Help to Buy, are also enabling more first-time buyers to enter the market.”

Mutuals and building societies increase mortgage lending – including to first-time buyers

Mutuals and building societies have helped to improve mortgage availability in the UK’s housing market, with figures from the Building Societies Association (BSA) showing gross mortgage lending hitting £18 billion in the first-half of the year – representing a year-on-year increase of 28%.

165,800 mortgages were approved in the first half of the year – including some first time buyers – again an increase of 17% year-on-year.

Brian Morris, Head of Savings Policy at the BSA, argued that mutuals and building societies are opening up the mortgage lending landscape, and this includes approving mortgages for first time buyers.

“Mutuals have increased their lending across the spectrum to all types of borrowers including first time buyers and those with small deposits,” he said.

“In fact lending to first time buyers accounted for almost a third of all lending by the sector in the year to June, helping 38,000 people take the first step on to the property ladder. This has been achieved ahead of the launch of the Government’s Help to Buy: Mortgage Guarantee Scheme, demonstrating that mortgage finance for those with lower deposits is already available at a building society.”

Lenders showing their support for first-time buyer initiatives

As well as Santander’s announcement that it has launched a Help to Buy mortgage range, Lloyds Banking Group has also revealed the role it is playing in the Help to Buy mortgage indemnity guarantee scheme, launching in January 2014.

It said that as the leading new-build lender it is working alongside the Council of Mortgage Lenders, the Department of Communities and Local Government and HM Treasury to finalise details of the scheme, as well as working to address housing apply.

At the start of the year the group also committed to lending £6.5 billion to first-time buyers get on the property ladder, having already helped 55,000 buyers secure their first home in 2012.

“The launch of the scheme is an important development and will give a significant boost to the housing market by addressing the issue of accessibility,” said Stephen Noakes, Mortgage Director at Lloyds Banking Group.

“We continue to work with the Government and other lenders to agree the final details, but expect to have a further announcement on our offering by the end of this year.

Posted by: Nicola Severn Categories: Finance Tags: , , , Comments Off on Struggle may be over for first-time buyers

0 Responses to Struggle may be over for first-time buyers

  1. avatar Jessica Bailey says:

    Great to see more first time buyers. What is also changing here is average age: I believe the average age of single first time buyers has moved up by around 2.7 years and 1.2 years for couples. Are first timers just saving for longer? The key test with the bigger loan to value mortgages will be a change in the interest rate environment: no surprise that low rates for an extended period has lured more buyers into the market with mortgage repayments looking attractive against monthly rents. Best,

  2. avatar Iain says:

    Ok, so this sounds great in the short term. However, what happens to the housing market when these government back schemes end? They sure will! Furthermore, most the latest schemes are linked to new builds- over priced stock- are first time buyer really getting a good deal? I don’t think so.