The statistics show that both gross advances and lending to first time buyers are at a recent peak, with gross advances are at their highest level since 2008 and lending to FTBs at its highest level since Q3 2007. On a similarly positive note, interest rates on new lending, the number of new arrears cases and stocks of possession cases remaining unsold are at their lowest level since this series began in 2007. There was also an increase in the value of new lending for buy to let over the past year – up from £4.3 billion advanced in Q4 2012 to £6.6 billion in Q4 2013, the highest quarterly amount since Q2 2008.
Gross advances of £51.5 billion in Q4 2013 were 31% higher than in Q4 2012. This was the highest amount advanced in a quarter since Q3 2008.
The value of loans advanced to first time buyers increased by £3.1 billion over the past year to £10.6 billion, an increase of 41%. This was the highest quarterly amount since Q3 2007.
High LTV lending has increased only very slightly since Q4 2013, as the proportion of gross advances at a high LTV was little changed at 2.1%.
The number of new arrears cases in Q4 2013 was 2.9% lower than in Q3 2013 at 29,208, the lowest quarterly number of new cases since the series began in 2007.
The total number of loan accounts with reportable arrears continued to decrease - from 279,649 in Q3 2013 to 264,862 in Q4 2013, a reduction of 5.3% and the lowest since Q1 2007. The performance of loans in arrears – payments received as a percentage of payments due – improved for the sixth quarter in succession to 61.9% in Q4 2013.
Arrears totalling £32 million on 8,191 accounts were capitalised in Q4 2013, an increase of 2.2% by number compared to Q3 2013.
New cases taken into possession totalled 6,137 in Q4 2013, a 21% reduction from Q4 2012.
As possession sales outstripped new possessions, the stock of possession cases remaining unsold declined for the ninth quarter in succession, down to 9,962 in Q4 2013 which is the lowest level since the series began.
David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services group, said:
"While the property market has been firing forwards, wage growth has been stuck in the mud of the economic recovery. Prices for first-time buyer properties have been marching steadily upwards, and have now reached a new record.
"The property market has remained accessible to first-time buyers, because an increase in high LTV lending has offset rising prices. This is enabling more first-time buyers to enter the market."
Jonathan Harris, director of mortgage broker Anderson Harris, says:
"An increasing number of borrowers are worried about the threat of an interest rate rise, with more than 80 per cent of mortgages taken out in Q4 2013 on a fixed-rate basis. However, another reason for the migration towards fixed rates is the fact that they are so cheap: they may have edged up slightly in the past few weeks but in Q4 2013 the average fixed rate fell to 3.25 per cent.
"The proportion of lending to first-time buyers increased as borrowers took advantage of the early introduction of the second phase of Help to Buy, and lenders who are not participating in the scheme extended their range of high loan-to-value products. The value of loans advanced to first-time buyers hit the levels last seen in the third quarter of 2007, illustrating that this important sector of the market has well and truly returned.
"Buy-to-let lending also continued to pick up, as investors shunned poor rates on savings accounts, choosing instead to invest their money in property. With rental yields higher than savings rates, and lenders offering cheaper mortgages with looser criteria, it is no surprise that the buy-to-let sector continues to expand. Of course, this makes it harder for first-time buyers to get on the housing ladder as they are competing with landlords for property and in cities such as London there is limited supply in the first place.
"The mortgage market has continued to perform well into this year, with plenty of competitively priced products available. However, the Mortgage Market Review will be introduced next month and there are fears that this will make it much harder to get a mortgage. While we believe there will be a slowdown as lenders ensure everything is functioning as it should be, many of them have already introduced the changes so it should largely be 'business as usual' for good quality borrowers who don't have issues with their credit history. It will also provide a welcome boost for brokers who will be able to interpret the new rules and guide borrowers through them."
