First-time buyer mortgages continue to rise

Impact of Mortgage Market Review described as 'subtle rather than dramatic'

The number of loans to first-time buyers jumped nine per cent in May compared to April, and was 19 per cent higher than May last year, according to the Council of Mortgage Lenders. By value, it was 11 per cent higher month-on-month and up 30 per cent on the same time last year.

First-time buyers typically borrowed 3.43 times their gross income with an average loan of £123,200 in May, up from £121,500 in April. 

"With May lending figures we get our first glimpse at the effect the Mortgage Market Review has had on lending trends and, at least so far, the impact appears subtle, rather than dramatic," said Paul Smee, director general of the CML. "First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted. There was no cliff edge."

Simon Crone, Vice President Mortgage Insurance Europe at Genworth said it was a 'major boost' to see first time buyer numbers rising.

"May was the first month where the new mortgage rules were fully operational, so the fact that first time buyer numbers were the strongest we have seen this year bodes well for the short-term, although the market is still a long way from its pre-recession state of health," he said.

"With the average loan to value rising to 84 per cent among first-time buyers, we are slowly but surely edging back to a situation where parental hand-outs aren’t the only means of buying your first home."

However Jonathan Harris, director of mortgage broker Anderson Harris, said that the impact of MMR on the market was still too early to evaluate.

"While some lenders were MMR-compliant ahead of the official launch at the end of April, using May data to assess the impact of the new rules is perhaps premature," he said. "People are still able to take out new mortgages and to remortgage but it is taking longer and borrowers may find they have to compromise in terms of rates and loan-to-values."

George Spencer, CEO of lettings agency Rentify, said the report also underlined the strength of confidence in buy-to-let which has risen 14 per cent over the last year.

"The fact that the number of new buy-to-let house purchase loans is up a fifth year-on-year is an indication of the perceived opportunities in this sector," he said. "And not only are there more new BTL mortgages, they are getting bigger in value as well, a 38 per cent increase in value showing that ever increasing property prices are not preventing investors from entering the market."

Stephen Johnson, Managing Director, Commercial Mortgages at Shawbrook Bank added that the buy-to-let sector’s continuing strength demonstrated its key role  in the UK’s housing supply.

"As the residential mortgage market settles into a new regime under the MMR, we may see a boost in rental demand from those who are no longer able to become homeowners driving up the buy-to-let market," he said. "If this happens, all parties including investors, brokers and lenders need to work to ensure that this growth is sustainable. If interest rates rise this year, as the Bank of England has indicated, investors need to be comfortable that income from properties will cover the higher rates that will follow."

 

Discover more property articles at Homes and Property
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: 3rd Line Virtualisation, Windows & Server Engineer

£40000 - £47000 per annum: Recruitment Genius: A 3rd Line Virtualisation / Sto...

Recruitment Genius: Refrigeration and Air Conditioning Service Engineer

£26000 - £35000 per annum: Recruitment Genius: A successful national service f...

Recruitment Genius: Business Development Executive / Sales - OTE £25,000

£15000 - £25000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Sales Administrator - Fixed Term Contract

£17500 - £20000 per annum: Recruitment Genius: We currently require an experie...

Day In a Page

Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?