First-time buyers 'drive' market

More people are climbing onto the housing ladder after figures showed the best start to a year for first-time buyers since 2008.

The Council of Mortgage Lenders (CML) reported that 16,400 loans were advanced to first-time buyers in February, up on the 15,900 in January and 17% stronger than a year earlier.

They now account for 43% of all house purchase loans, the sixth consecutive month that this indicator has been at or above 40% and suggesting that market conditions continue to improve for newcomers.

In contrast, lending to home movers fell in February for the third consecutive month, with the figure of 21,500 loans down by 4% on January.

CML director general Paul Smee said: "First-time buyers are continuing to take advantage of more favourable conditions, helping to drive the underlying trend for resilient house purchase lending."

The number of mortgages on the market has increased by around one third since the Government launched its Funding for Lending scheme (FLS) last August, which gives lenders access to cheap finance in order to help borrowers.

There have also been recent signs of lenders bringing out more innovative deals, such as allowing first-time buyers to take out a mortgage with a 5% deposit provided that their parents put some cash into a savings account which is linked to the loan.

Indicators of loan affordability from the CML show that first-time buyers borrowed 3.19 times their income in February, down from 3.2 times in January, while the average loan to value ratio remained at 80%.

PA