Mortgages for first-time buyers fall

In concerning news for those hoping to get on the property ladder, the size of mortgages granted to first-time buyers are at their lowest level in the last 21 months, and the number of loans approved has also dropped significantly, according to the latest report from the Council of Mortgage Lenders (CML).

Overall, 19,000 mortgages for first-time buyers were approved in January 2015, down 14 per cent from the same month in 2014. However, mortgages for buy-to-let rose by 12 per cent, showing that affordability remains a challenge for many looking to get on the property ladder, particularly compared to those expanding an existing property portfolio.

The fact that mortgages for home movers also fell by 14 per cent is an indication of the increasingly competitive state of the housing market across the UK.

The drop in mortgage lending has come as a surprise to many in the industry, even when making allowances for the expected seasonal drop in house-buying. Recent changes to stamp duty are also a factor, as many buyers rushed to complete their purchases before the new year to avoid being hit by the higher rate.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Tougher rules introduced by the Mortgage Market Review (MMR) mean affordability is an issue for many borrowers, while more lenders may be offering higher loan-to-values, actually getting a big-enough mortgage can be more of a challenge, particularly in London and the south-east."

Compared to December 2014, lending to first-time buyers fell by a substantial 27 per cent. Furthermore, the average UK house price has risen £12,000 over the last year, reaching £192,372, according to data from Halifax.
The increase is particularly marked in London, where the average house has gone up in value by 19.1 per cent over the past 12 months to £514,000. This means that home-owning is becoming increasingly difficult for many Londoners, and is largely due to a growing shortage of affordable housing in the capital.

Published 20th March, 2015

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