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First-Time Buyer Market Remains Strong

Mortgage lending to first-time buyers totalled £5.5 billion in June this year on an unadjusted basis, which is a 28% increase over May and 25% higher than June last year. In total, 34,300 loans were made, up 24% month-on-month and 17% year-on-year.

Mortgage Market is Open for Business

Looking at lending on an unadjusted basis over the whole of second quarter, figures from the Council of Mortgage Lenders (CML) show that first-time buyers borrowed £13.7 billion, up 23% on the first quarter of the year and up 21% on the same quarter in 2015. This equated to 87,100 loans, up 23% month-on-month and 14% year-on-year.

“These figures reveal growth in house purchase activity and in particular for first-time buyers,” explained Paul Smee, director general of the CML. “As ever, there is uncertainty and it will take more time and patience to understand how the market will evolve in the current environment – these figures predominantly cover activity in the run-up to the referendum. We still believe that the mortgage market is well capitalised, resilient and open for business, and will remain so for the foreseeable future.”

First-Time Buyers Drive Mortgage Lending

According to the CML, first-time buyers are continuing to drive house purchase lending, outperforming home movers for the third month running. More loans were advanced to them in June than at any time since August 2007.

First-time buyers are also experiencing relatively stable affordability metrics. The typical loan size increased to £135,400 from £131,400 in May, while the household income of borrowers also increased slightly from £40,000 in May to £40,377 in June, which meant the income multiple went up from 3.51 to 3.55.

A Positive Picture for First-Time Buyers

Recent research by Halifax has also painted a positive picture for first-time buyers. Its latest First-Time Buyer Review found an estimated 10% increase in the number of first-time buyers in the first half of 2016 compared with the same period the previous year.

In total, Halifax estimates there were 154,200 first-time buyers in the first six months of 2016 compared with 140,500 in the same period of 2015. It was also more than double the market low in the first half of 2009 (72,700). For the same six-month period since 2012, the number entering the housing market has exceeded 100,000. Nonetheless, the number of first-time buyers in the first half of 2016 was nearly a fifth lower (36,700) than at the peak of the last boom in 2006.

Halifax’s research also revealed that the number of first-time buyers has increased more rapidly than the number of home movers over the past few years as a whole. As a result, first-time buyers have increased as a proportion of all mortgage financed house purchasers from 38% in 2011 to an estimated 47% in 2016. However, the percentage has been stable over the past three years as the numbers of FTBs and home movers have risen at a similar pace since 2014.

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