First-time buyers leading market growth

In the whole of 2013 first-timer buyers took out 268,800 loans with an average LTV of 80%.

Young buyers appear to be budgeting for the years ahead, as over 95% opted for fixed rate mortgages in December.

David Brown, commercial director of LSL Property Services, said: “First time buyers have entered 2014 with an extraordinary momentum not seen for seven years. And every indication is a further acceleration in these first few months of the New Year.

“However, it is important to remember that property is still growing less affordable in terms of wages. For the time being a far healthier mortgage market has pulled out all the stops, but the next stage will be when earnings rather than mortgages can make homes more affordable.”

Richard Sexton, director of e.surv chartered surveyors, addedd: “Home lending is soaring upwards, carried by surging numbers of first-time buyers. Help to Buy is proving vital in helping new buyers build the deposits they need to access the market, which has driven up demand for property. And there is unlikely to be any let-up in lending over the next few months. Unemployment has dropped like a stone, bringing the prospect of a rising base-rate closer. Buyers are moving now to capitalise on cheap fixed-rate deals, and make the most of cheaper monthly repayments while they can.

“But although the demand for homes has transformed over the past year, the supply of homes is still stuck in a post-recession lull. Even as rates remain low, overall mortgages are growing in size, to compensate for rising house prices – an issue exacerbated by the dire supply of housing. As a result, lending to borrowers with small deposits is more important than ever. When introduced, MMR regulations could form another future obstacle, as affordability checks will become even more stringent. In fact, the increase in lending could in part be down to an eagerness by lenders to get ahead before MMR is brought in.”

Homemover loans in December 2013 increased by 19% compared to December 2012, while remortgaging rose by 31%.

Buy-to-let lending also finished strongly in the last quarter of 2013, rising by 20% compared to the last quarter of 2012.

Paul Hunt, managing director of Phoebus Software, said: “Record low interest rates have sent ripples of fluidity throughout the market and unleashed a barrage of first-time buyers. It’s not the just the sheer scale of the recovery that is astonishing, but also the speed at which it is accelerating. In fact, not only are first-time buyer numbers up.

“Lenders have been proactive in their approach, by lending to a range of buyers including those with small deposits, by promoting a greater product choice. The signs show the mortgage market has turned a corner, having found a way to substantially boost activity in the property market.”