Overall, first-time buyers in 2014 were advanced a total of 311,500 loans for house purchase, up 15% on 2013. The value of these loans (£45bn) also increased by 24% on the previous year.
First-time buyers also saw a month-on-month lending increase, with 26,100 first-time buyer loans in December - up 3% on November, but 3% down on December 2013. By value, £3.8 billion was advanced to first-time buyers in December - 6% up on November but unchanged compared to December 2013.
However, there were still 13% fewer loans advanced in 2014 compared to lending levels seen in 2007. The fourth quarter of 2014 saw the third strongest volume of first-time buyers taking out loans since 2007, behind the two preceding quarters of 2014.
The typical loan size for first-time buyers rose month-on-month to £125,400 in December, up from £123,746 in November.
First-time buyers in December paid 19.0% of gross income towards covering capital and interest payments, little changed from 19.3% in November but still significantly less than the recent peak of 24.8% in December 2007.
First-time buyers in the fourth quarter saw minimal change compared to the previous quarter and the same quarter in 2013. There were 80,100 loans advanced to first-time buyers in this period - down 2% on the third quarter and unchanged compared to the fourth quarter of 2013. The value of these loans totalled £11.6 billion, which was down 5% on the third quarter but 5% up on the fourth quarter of 2013.
First-time buyers in the fourth quarter of 2014 saw some improvements in affordability quarter-on-quarter with the average loan-to-value at 3.38, down from 3.41 in the third quarter. However, the average total household income of a first-time buyer declined slightly from £38,463 to £38,324, but this was countered by a decrease in the average mortgage size quarter-on-quarter from £125,900 to £124,450.
Paul Smee, director general of the CML, commented:
"Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years. The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and we'd expect this steadying of the market to continue in 2015.
"In 2014, the mortgage market saw unprecedented change with the introduction of major regulatory reform but the market has adjusted and kept its stability throughout. There will be challenges in 2015, including preparation work on the European Directive implementation and a General Election potentially bringing new housing policies to be put in place. But the industry is stronger than a year ago and ready to meet the challenges going forward."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"The number of first-time buyers remained consistent with the previous quarter as borrowers took advantage of a good range of options at higher loan-to-values. Taking the year as a whole, we saw the highest number of first-time buyers in seven years, illustrating the success of government schemes such as Help to Buy and the willingness of lenders to offer high LTVs. The slowdown in the housing market will be advantageous to this group in particular who won’t have to worry so much about house prices moving beyond their reach."
