First-time mortgage lending 'down'


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The Independent Online

Mortgage lenders have insisted that first-time buyer activity is strengthening, despite new figures showing that lending to this sector dipped for the first time since the start of the year.

Some 19,400 loans worth £2.5 billion were taken out by first-time buyers in April, a 1% decrease on the previous month, according to Council of Mortgage Lenders (CML) figures.

This marked the first drop in first-time buyer numbers since January.

Despite the recent pause, activity among first-time buyers in the first four months of the year has been stronger than during the same period a year ago, with 11% more loans advanced, the CML said.

First-time buyers made up 46% of all loans to home buyers in April, "considerably" higher than the 38% average seen since 2007, the CML said.

Lending to first-time buyers was two-thirds higher in April than in the same month last year, although the ending of a stamp duty concession for this sector a year ago distorted the market.

The latest figures also show that first-time buyers now need to put down a 19% deposit on average, compared with 20% in March.

Mortgage availability has shown a sharp increase since last August and lenders have slashed their rates since the Government launched a scheme called Funding for Lending last August to help boost the market.

There have been signs that the scheme has prompted stronger competition among lenders to attract first-time buyers, with the launch of some innovative low-deposit deals.

But financial information website Moneyfacts has said that despite an increased number of mortgages on the market generally, fewer deals are available for people with a 5% deposit than there were a year ago.

Loans available for people with a 5% or a 10% deposit make up 14% of the mortgage market, a share which has not changed from a year ago, Moneyfacts said.

The Government's new scheme, called Help to Buy, is specifically aimed at helping people with smaller deposits and will be fully fired into action from next year.

CML director general Paul Smee said: "Lending to first-time buyers remains above the levels seen at the same time last year.

"The Help to Buy Scheme announced in this year's Budget should provide a further boost to the first-time buyer and home-mover markets but we still await further details on how the initiatives will work."

The CML's latest figures also show £3.8 billion-worth of mortgage loans were advanced to home movers in April, a 3% drop on the previous month but higher than a year ago.

A total of £3.4 billion was loaned to borrowers re-mortgaging, showing 10% growth compared with March but slightly down on a year ago.

Housing Minister Mark Prisk said: "We're determined that anyone looking to work hard, get ahead in life and own their own home should get the government help they need.

"That's why we've introduced the Help to Buy scheme to enable homeowners to buy homes with a fraction of the deposit they would normally require. And because the scheme is available on newly built homes, it will also help boost housebuilding, on top of our multimillion-pound package of measures to get Britain building."