First time buyer numbers continue to grow

According to the latest report from the Council of Mortgage Lenders (CML), homebuyer numbers saw a marked increase on February figures as 61,700 loans were taken out during the month - a rise of 27% against February but down 12% on March 2016.

First-time buyer and home mover activity came out of the winter seasonal dip this month with the highest monthly volumes of the year so far. While home movers decreased year-on-year compared to March 2016, more loans were advanced to first-time buyers this year than in any month of March period since 2007.

On a quarterly basis, house purchase activity was at its weakest for two years since the first quarter of 2015. By contrast, the number of re-mortgage loans advanced to borrowers was at its highest since the first quarter of 2009.

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The proportion of household income used to service capital and interest rates continued to be near historic lows in March for both first-time buyers and home movers at 17.2% and 17.5% respectively.

Affordability metrics for first-time buyers saw the typical loan size increase slightly from £132,200 in February to £133,500 in March. The average household income remained the same month-on-month at £40,000. This meant the income multiple went from 3.54 to 3.53.

The average amount borrowed by home movers in the UK decreased to £172,000 from £176,000 the previous month, while the average home mover household income decreased slightly month-on-month from £55,000 to £54,100. The income multiple for the average home mover was unchanged at 3.34.

Paul Smee, Director General of the CML, had this to say: “Comparing this March to last year is misleading because of the peak in activity before the stamp duty changes last Spring. Overall, lending trends have remained reasonably consistent. The relatively sluggish activity among home-movers stands in contrast to the growth in first-time buyer and re-mortgage activity, but in aggregate the market is showing broadly the levels of activity we expected. As we head into the summer, we expect a continuation of these trends, with both first-time buyer and re-mortgage lending expected to maintain momentum in the light of the very attractive deals currently available.”

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