Number of first timer mortgages on the rise as buy-to-let loans fall

Number of first timer mortgages on the rise as buy-to-let loans fall [Photo: PRImageFactory via iStock]

The number of first-time buyers managing to get themselves a mortgage to get onto the property ladder has climbed by double-figure amounts in the past year, as buy-to-let investment levels stall and more people look to become homeowners nationwide. 

According to the latest findings published this week by the Council of Mortgage Lenders (CML), new buyers in the UK borrowed more than £5.1 billion in August alone this year, which meant the value of lending jumped by 13 per cent when compared to July, and by a rather impressive level of 24 per cent when held up against the same month a year ago. 

In total, new buyers took out some 31,800 loans in August of this year, according to the data, which marked a 19 per cent rise when compared to the same month in 2015. The positive in that regard is that not only are there more first timers around, but they are also now spending more on homes than they have done in the past. 

Across the property market as a whole, the total value of all loans for purchases totalled some £12.2 billion for August. This was made up of 66,000 loans nationwide, which marked a rise of some nine per cent when compared to the same month a year ago. 

The difference in the speed of growth between the property sector as a whole and the market for newcomers just shows just how big the increase in activity from the latter has been. First timers have been, without a doubt, the biggest contributors to growth since last August, while remortgagers and buy-to-let investors are spending less than they did a year ago. 

Paul Smee, director general of the CML, said: "House purchase activity bounced back from a dip in July, reflecting resilience in first time buyer activity. Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months."

"Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels," he added.