First time buyer lending up but still down on a year ago, latest mortgage data shows

Lending to first time buyers in the UK increased in June but overall has changed little since the same month a year, ago, according to the latest report from the Council of Mortgage Lenders.

Home mover lending also increased and saw a slight yearly increases in volume and value while home owner remortgage activity increased by over a third month on month and year on year.

The CML data also shows that buy to let continues to grow year on year and month on month, mainly driven by buy to let remortgage activity.

The first quarter of the year saw the mortgage market slow but now lending to first time buyers increased in number and amount by over 20% in the second quarter of 2015.

‘Notable this month is the uptick in remortgage activity among home owners, perhaps reflecting an increased desire to lock into competitively-priced mortgage deals in advance of any rise in rates,’ said Paul Smee, director general of the CML.

‘It is likely that people are now beginning to feel a rate rise is a realistic prospect and not just a distant theoretical possibility. After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts,’ he added.

According to Adrian Gill, director of Your Move and Reeds Rains estate agents, a shortage of affordable listings is affecting the prospects for first time buyers. ‘While the demand hasn’t gone anywhere, the goalposts have shifted. Even with a leg up from government schemes, those looking to make their first foray onto the ladder are having to be more open minded about what they can afford, and these home buying incentives and cheap mortgage finance won’t hang around for ever either,’ he said.

‘In the long term, those who can’t act now will be reliant on more house building to replenish the stock of homes available, and keep mortgage repayments and deposits within grasp,’ he added.

Tougher regulation is restricting lending for affordable homes, according to Patrick Bamford, director of mortgage insurance Europe for Genworth. ‘Even improved affordability of loans is not enough to produce a notable increase in first time buyer activity year on year,’ he explained.
 
He also pointed out that following the recession there has been a drastic fall in home ownership, particularly among younger people, across all regions of the UK impacted by high house prices and a lack of supply.

‘The South East and North West have been particularly hard hit, with the shortfall in numbers when compared to pre-recession greater than the entire populations of Brighton and St Helens respectively. We are still a long way from closing the gap and returning to a normal first time buyer market,’ said Bamford.

‘It is crucial for the government to introduce a permanent system of private mortgage insurance to accompany its planning reforms and drive a thorough recovery of the high loan to value (LTV) market. Help to Buy remains just a temporary solution to a permanent problem. The only way to overcome the existing shortfall in first time buyer numbers and support the ambitions of home ownership is if affordable mortgages, those requiring just 5% or 10% deposits, are made available permanently,’ he added.

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Source: Property News Spain