Mortage lending up as first-time buyer loans rise by a third

High numbers of borrowers opting for fixed rates

A 3 bedroom terraced house for sale in Grafton Street, Cambridge. Offers in region of £425,000, on with Redmayne Arnold & Harris

New figures from the Council of Mortgage Lenders released today show that house purchase lending has continued to grow, up 7 per cent on July and 15 per cent on August last year.

First-time buyers took out 27,100 loans in August, up 33% compared to August last year, with 94 per cent opting for a fixed rate mortgage.

Paul Smee, director general of the CML, said: "The healthy growth in all lending areas compared to the same time last year is indicative of more confidence in the market. The high number of borrowers, in particular first-time buyers, opting for fixed rates reflects the attractive pricing currently on products which can provide helpful stability to borrowers for the next few years."

"First-time buyers are finding it easier to get a mortgage, as Funding for Lending pushes down rates across the loan-to-value curve," said Mark Harris, chief executive of mortgage broker SPF Private Clients. "The publicity surrounding the launch of the second phase of Help to Buy is also boosting the market, creating interest and instilling the belief that it is finally possible to get a mortgage."

George Spencer, chief executive officer of online lettings company added: "Fewer landlords remortgaged in August than in the previous month, which is why the buy-to-let figures as a whole were slightly down. But investors continued to take on new borrowing and expand their portfolios, encouraged by rock-bottom mortgage rates, strong rental yields and the general recovery in the housing market. While savings rates continue to be poor, property offers a serious alternative to investors looking to boost their returns."

Richard Sexton, director of e.surv chartered surveyors, said that when Help to Buy 2 starts to take effect there could be a dramatic recovery "the likes of which have never been seen before".

"Make no mistake," he said, "Help to Buy is badly needed to help make deposits more affordable across the country. First-time buyer levels and house purchase lending are still well below their historic levels. Wages and incomes in the north are dashing dreams of homeownership. In the south, where prices are much higher, even normal people with decent jobs can’t raise the gargantuan deposits required for a first home. As long as it is complimented by more house building, which will help keep house price rises under control, then Help to Buy will only be a good thing for the country.”

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: "No-one wants to see home buyers and movers wholly reliant on Help to Buy, but despite improving conditions in the wider marketplace, it remains a vital part of its rehabilitation."