First-time buyer levels recover – but still 8% lower than last year

Thursday 11th August 2011

First-time buyers were 8% lower by both volume and value in June this year than last, the Council of Mortgage Lenders has reported.

There were 18,100 first-time buyer loans, worth £2.2bn, in June. Despite the annual drop, the figures were up 24% by volume and 29% by value on May’s dismal figures, and the highest for any month since last August.

It was a similar story for home movers. They took out 28,600 loans worth £4.6bn in June – down on the year, but up on the month.

Home movers took out 28,600 loans, worth £4.6bn, in June  – up from 23,800, worth £3.7bn in May, but down from 32,800 loans, worth £5.3bn, in June 2010.

Overall, there were 46,700 loans for house purchase, worth £6.7bn, in June, up 22% in volume and value from May, but down 11% by volume and 13% by value on June 2010.

Remortgaging was unchanged in June, totalling 30,700 loans worth £3.8bn. Unlike lending for house purchase, however, remortgaging was up 10% by volume and 9% by value on June 2010.

Over the quarter, between April and June, there were 122,000 loans for house purchase, worth £17.6bn, up from 97,200, worth £14.1bn, in the first quarter.

But lending for house purchase was lower than in the second quarter last year, when there were 138,300 loans, worth £20bn.

There was little change in lending requirements for either first-time buyers or home movers in June. First-time buyers on average paid a 20% deposit, unchanged since February. First-time buyer deposits are lower than the high of 25% seen throughout 2009, but higher than the historic norm of 10%. Home movers took out a mortgage worth 70% of their property’s value for the second month.

Commenting on the data, new CML director general Paul Smee said: “Whilst there are clearly financial uncertainties ahead, it is encouraging to see more house buyers surfacing at the start of summer.

“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while.”

However, Nick Hopkinson, director of property company PPR Estates, was much less optimistic, saying: “As the post credit-crunch lending slump continues, it is no surprise to see that the total value of home purchase mortgages taken out in June is 13% lower than even last year’s amounts.  

“The monthly number of UK property sales remains roughly half the level needed for a properly functioning market to flourish.  

“In a world where western Government debt viability is constantly being questioned by the bond markets and economic uncertainty abounds at a corporate and personal level, it is totally understandable that potential home buyers are sitting on their hands and mortgage lending continues to shrink.
 
“Amongst other things, higher fuel bills hitting the doormats this month will only add more financial stress to many struggling households.  

“With economic headwinds likely to reach gale force, I fear we are looking at further falls in house prices and mortgage lending over the rest of this year.”