First-time buyers saw a 12% month-on-month lending increase, with 29,900 FTB loans in October, 14% up on October 2013. By value, there was £4.4 billion advanced to first-time buyers in October - 10% up on September and 22% higher than October last year.
First-time buyers saw a slight dip in affordability, typically borrowing 3.39 times their gross income, compared to 3.40 in September.
The typical loan size for first-time buyers fell slightly month-on-month to £125,800 in October, down from £126,000 in September, while typical gross income of a first-time buyer household changed slightly to £38,820 in October from £38,714 in September.
First-time buyers in October paid 19.5% of gross income towards covering capital and interest payments, similar to September's 19.6% but still significantly less than the recent peak of 24.8% in December 2007.
Paul Smee, director general of the CML, commented:
“This has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy-to-let lending showing steady, consistent growth throughout 2014 compared to 2013. There have been fluctuations month to month but overall the market appears to be showing a positive direction of travel going into the new year.
"Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts; the new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes."
Alan Cleary, Managing Director of Precise Mortgages commented:
“First time buyers have seen a further boost today with CML figures revealing a 12% month-on month lending increase.
“With fundamental reforms to stamp duty announced in this month’s Autumn Statement we expect to see the first time buyer market continue to lift in the New Year. The move is an encouraging sign for industry and consumers alike, and should bolster confidence overall. However, we must ensure all prospective homebuyers reap the benefits.
"At Precise we know first-hand that freelancers and self-employed people are groups in particular that often struggle to gain support and credit from mainstream lenders. That’s why we need to be certain that as an industry, even with changes to stamp duty, we are still doing everything we can to support credit-worthy individuals on the property ladder.”
David Newnes, director of Your Move and Reeds Rains estate agents, said:
“First-time buyers have been forging ahead in the market this year. But more recently lending to new buyers is starting to wane. Mortgage market measures introduced in April have trimmed back lending since, coupled with the ongoing debate about when interest rates might rise and the LTI cap this has discouraged buyer demand. The recent stamp duty changes could be a shot in the arm, helping revitalise activity at the lower levels of the market and offering attractive savings enabling more buyers to enter the market more quickly.
"But in many parts of the country outside of London, the average price paid for a starter home is far shy of even the first stamp duty band. For these first-time buyers, the tax changes are pie in the sky, and won’t have much impact on the ground. Here, where property is already more affordable, finding a large deposit is the hardest challenge. So away from the south-east corner of the UK, Help to Buy and higher LTV lending remain the vital tonics, helping new buyers swallow the up-front costs of climbing onto the property ladder, by making the deposit more manageable.”
