Banks and building societies have reported that first-time buyers are “driving” the housing market as the number of people taking their first step on the property ladder continued to run at a six-year high in December.
The total number of loans handed out to this sector last year rose to 268,800, marking a 23% increase on 2012 and the highest number since 359,900 first-time buyer loans were advanced in 2007, according to the Council of Mortgage Lenders’ (CML) figures.
The CML said that “following a year of strong growth”, the number of first-time buyer loans being handed out increased to 26,700 in December with a total value of £3.7bn, surging by 48% compared with December 2012 and marking the strongest monthly total seen since winter 2007.First-time buyers made up around 44% of all home loans advanced to home buyers last year, up from 40% in 2012.
The figures also showed that despite the launch of Government support schemes such as Help to Buy, first-time buyers are still putting down a 20% deposit typically, which is unchanged from December 2012.
They are also stretching themselves further with their borrowing. First-time buyers typically borrowed 3.43 times their gross income in December last year, edging up slightly from a ratio of 3.38 in November.
CML director general Paul Smee said: “First-time buyers were an especially important factor in driving the market forward in 2013 as improved economic conditions, as well as the introduction of government schemes like Help to Buy, have given the opportunity for them to enter the market and become home-owners. The consistent upward lending trend seen throughout 2013 would suggest relative optimism going forward.”