CML: FTB loans up 38pc

The total value of these loans was £3.1bn, down 16% on December 2013, but a year-on-year increase of 55% in comparison to January 2013.

The typical first-time buyer income multiple decreased, with first-time buyers typically borrowing 3.39 times their gross income in January, compared to 3.43 in December 2013.

First-time buyers in January spent 19.3% of gross income to cover capital and interest payments, slightly higher than the 19.2% in December 2013 but down from 19.8% in January 2013. In addition, over 95% of first-time buyers opted for fixed rate mortgages in January.

It appears that the introduction of the Help to Buy mortgage guarantee scheme has started to have an impact on FTB deposit requirements.

The average loan-to-value for first-time buyers was 82% in January, up from 80% seen in December 2013 and a year previous in January 2013.

Henry Woodcock, principle mortgage consultant, IRESS said: “The mortgage market is in fine fettle at the moment.

“First-time buyers are taking advantage of very competitive rates on offer and the increasing choice of mortgage deals without colossal deposits, while the prospect of house price appreciation is drawing demand from new buyers.

“Equally, buyers benefitted from the scramble from lenders to make use of cheap funds in the Funding for Lending before mortgage lending was no longer eligible for the scheme. As things stand, we expect that the flurry of activity will continue this month as brokers look to clear the decks ahead of the MMR coming into force in April.

“However, there are clouds on the horizon. The MMR’s implementation in April will undoubtedly cause some hiccoughs, while the Budget may see Help to Buy scaled back.

“If this is the case, the Chancellor must take care not to pull the rug from the housing market recovery too early, especially in regions that have not made the same strides as London and the South East.”

Alan Cleary, managing director of Precise Mortgages added: “Further increases in the number of first-time buyers is a sure fire sign that confidence is returning to the housing market.

“Yet, while the economy may be on the right path to boosting the property market, it’s not all plain sailing.

“First-time buyer numbers are not yet at pre-crisis levels and today’s data compared to the summer of 2007 still shows a substantial disparity.

“Making up this gap could be potential buyers currently left un-served by mainstream lenders so it’s paramount that there are products that cater to all credit worthy buyers.

“Improvements to the economic environment should translate into greater access and a smoother process for all potential first-time buyers.”

The CML also found that the total number of loans advanced to home-owners for house purchase decreased in January and was down 16% compared to December but up 30% on January 2013.

Overall, 48,600 loans were advanced in January with a total in value of £8bn, which was a decrease of 14% in value on December 2013 but a 43% increase in comparison to January 2013.

The number of loans advanced to home movers for house purchase totalled 26,800 in January, down 15% in volume compared to December but up by 25% compared to January 2013. Home mover loans totalled £4.9bn in value in January, which was a month-on-month decrease of 13% compared to December, but up 36% compared to January 2013.

In contrast to the month-on-month decrease in lending for home-owner house purchase, home-owner remortgage activity increased in January with a total of 28,000 remortgage loans advanced, up 10% in volume compared to December and up 16% compared to January 2013.

These loans totalled £4.2bn in value, an increase of 11% on December and up 31% compared to January 2013.

Gross buy-to-let advances in January totalled 15,700 loans, which was up 8% compared to December 2013 and up 37% compared to January 2013.

The value of these loans totalled £2.1bn, which was an increase of 11% compared to December and up 40% compared to January 2013.

Similarly, Buy-to-let loans for house purchase followed the same trend up 11% in January to 8,100 loans in total compared to December, and up 34% compared to January last year.

The loans totalled £900m in value, which again was up 7% compared to December and up 32% compared to January 2013.

In parallel to this, buy-to-let remortgage lending increased in January to 7,500 loans, which was up 6% compared to December and up 42% compared to January 2013.

These buy-to-let remortgages had a total value of £1.1bn, up 10% compared to December and a year-on-year increase of 55% compared to January 2013.

George Spencer, chief executive officer of Rentify, the nationwide lettings company, said: 'While residential lending was affected by a seasonal dip, with January a subdued month compared with December, this wasn't the case with the buy-to-let sector.

“Quite simply, buy-to-let goes from strength to strength. Both the number of loans for new purchase and remortgaging increased in January, as landlords took advantage of cheap mortgage rates and poor returns on savings to get into buy-to-let for the first time or expand their portfolios.

“Fears of an interest rate rise at some point are persuading many landlords to move off cheap reversion rates onto low fixed rates, helping them with budgeting.

“Buy-to-let is an increasingly attractive investment proposition, with several lenders improving their pricing recently.”

Paul Smee, director general of the CML, added: "January is always a subdued month in the mortgage market but the underlying trend and strong year-on-year growth across all borrower groups indicates a strong start to 2014 continuing the sort of lending levels seen throughout 2013.

“Lending to first-time buyers and home movers has continued its upward trend and this, coupled with the growth in remortgage and buy-to-let activity, would suggest that all parts of the market are open for business."