First Time Buyer Loans Increase
The housing and home owner loan markets in the UK have been struggling to see signs of improvement for some time now. However, a new survey has shown that there has been a 22 per cent increase in the number of loan approvals over the course of the last twelve months to May this year, largely due to first time buyer activity.
This has largely been driven by a significant increase in the number of home owner loan and mortgage products designed specifically for first time buyers. The figures have shown that since June 2009, the number of first time buyer loan products has increased by almost three times.
The news comes from figures supplied by Moneyfacts, who say that there are now a total of 183 different home owner loan deals which are aimed at first time buyers, compared with just 62 back in June 2009.
Whilst the number of loan products has increased, the increased level of competition amongst banks and building societies has caused the average interest rate on these loans to reduce as well. The average interest rate for a first time buyer loan was 5.63 back in June 2009, but this has now reduced to just 5.22 per cent.
All these improvements to loan products, along with an increase in the average loan to value for first time buyers, is now making buying a house and taking out a loan, a more attractive proposition than it has been for some time.
Louise Holmes of Moneyfacts said “First time buyers are often considered to be the lifeblood of the housing market. As well as high mortgage rates, many borrowers have found it difficult to find funds for large deposits, often entirely beyond their financial capabilities.”
“Higher loan to value mortgages have made a return to the market over recent months, suggesting lenders are taking positive steps to help the first timer buyer market.”
