The total number of loans advanced to first-time buyers in February totalled 22,200, a slight increase of 2.3% in volume compared to January and up 41% compared to February 2013. These loans totalled £3.1bn in value which was exactly the same as the January figure but an increase of 55% compared to February 2013.
The typical first-time buyer income multiple increased slightly, with first-time buyers typically borrowing 3.40 times their gross income, compared to 3.39 in January. The typical loan size for first-time buyers was £119,000 in February, which was a decrease from £119,735 in January. In parallel to this, the typical income of a first-time buyer household fell slightly to £35,297, which was down from £36,408 in January.
Low mortgage interest rates have kept borrowers' payment burden low. First-time buyers spent 19.2% of gross income to cover capital and interest payments, lower than the 19.3% in January and only slightly higher than the recent lowest level of 19.1 recorded in April 2012, April 2013 and November 2013.
Paul Smee, director general of the CML, commented:
“We would expect a seasonal lending dip around this time of year. However, lending to both first-time buyers and home movers bucks this trend, continuing to show momentum. The substantial year-on-year growth shows how far the market has moved since the flat period experienced up until around a year ago."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"The number of first-time buyers increased substantially compared to February last year, demonstrating not only the importance of Help to Buy but also the appetite of lenders more generally to lend at higher loan-to-values. As property prices continue to rise, mainly in London but increasingly beyond, this will be increasingly important in enabling borrowers to keep up and get the mortgages they need.
"However, any fears that borrowers will be tempted to overstretch themselves can be allayed by the introduction of the Mortgage Market Review in a couple of weeks. Processing times for mortgage applications are likely to increase as a more forensic approach to expenditure is adopted but it should result in a more sustainable mortgage market that works better for consumers and lenders."
