CML: First-time buyer lending up 24pc

There were 311,500 loans issued for first-time buyers last year, up 15% on 2013's total.

But in the fourth quarter of 2014 loan values fell by 5% from the third quarter, standing at £11.6bn.

Paul Smee, director general of the CML, said: "Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years.

“The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and we'd expect this steadying of the market to continue in 2015.”

He added: "In 2014, the mortgage market saw unprecedented change with the introduction of major regulatory reform but the market has adjusted and kept its stability throughout.

“There will be challenges in 2015, including preparation work on the European Directive implementation and a general election potentially bringing new housing policies to be put in place.

“But the industry is stronger than a year ago and ready to meet the challenges going forward."

In December there were 26,100 loans issued to first-time buyers valued at £3.8bn, up 3% and 6% on November 2014.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Crucially, house price rises have still left the door open to first-time buyers, with more loans to new homeowners in 2014 than any year since the financial crisis.

“Despite the Mortgage Market Review being followed by new loan-to-income caps, first-time buyers still have an increasing number of products to choose from – particularly at high loan-to-values thanks to the influence of Help to Buy.

“December’s Stamp Duty changes have given further encouragement to buyers at the lower end of the market and helped them regain some of the ground lost to rapid house price inflation last year.

“The more settled rate of growth expected in 2015 should help more buyers to get a foot on the property ladder."

Remortgage lending declined in the fourth quarter, as 73,100 loans were issued totalling £11.1bn, down 13% and 4% from the third quarter of 2014.

And in December there were 22,300 mortgage loans issued valued at £3.4bn, down 7% and 6% from November.

Danny Waters, chief executive of Enterprise Finance, said: “Remortgaging activity continues to decline on both a monthly and yearly basis and hasn’t actually registered an annual improvement since the summer.

“This would suggest that homeowners are gambling on further reductions or are trapped on their current home loan; possibly because their original product is not compatible with current affordability requirements.

“It also suggests that some homeowners wanting to access capital are already on a competitive mortgage rate and don’t want to jeopardise this by remortgaging on to a potentially less favourable rate.

“Such individuals are considering alternative methods of finance such as secured loans.”

For homebuyers house purchase lending dropped by 5% in the fourth quarter of 2014 with 173,200 loans.

These totalled £28.8bn in quarter four, down 8% from quarter three.

On a monthly basis December saw 55,600 loans totalling £9.3bn for homebuyers, an increase of 1% and 3% from November.

Steve Bolton, founder and chairman of Platinum Property Partners, added: “Buy-to-let was the fastest growing sector of the mortgage market in 2014, outpacing both house purchase and remortgage lending considerably.

"While the number of house purchase loans grew 11% annually, gross buy-to-let loans increased by more than double this amount (23%) year-on-year. Just over £27bn worth of loans was given to buy-to-let investors in 2014: an increase in value of 32% compared to the previous year.

“As returns on savings remain low, buy-to-let offers an investment opportunity with tangible capital growth.

"The ONS House Price Index indicates house prices grew by nearly 10% annually in December, giving investors an increasingly valuable asset as well as the opportunity for monthly rental income.

“Further growth in the buy-to-let sector is expected in 2015: our research shows that two in five current landlords plan to expand their property portfolio this year.

"Buy-to-let is also likely to become even more popular in April as pension freedoms allow retirees to make investing in property part of their retirement planning.

"However, while there may be eye-catching returns to be had, landlords should also consider the needs of Generation Rent. Investing in Houses in Multiple Occupation (HMOs) makes efficient use of current housing stock and provides quality accommodation at more affordable prices for young professionals.”