First Time Buyers Are Still A Rare Breed
The number of first time buyers entering the housing and mortgage loan market has been steadily reducing over the course of the past twelve months, but it looks as though they may have to be classified as an endangered species before too long, if the current trend continues.
According to the latest figures from the Council of Mortgage Lenders (CML), numbers are continuing to decline as many potential buyers are continuing to be put off by further reductions in house prices and much stricter lending criteria from banks and building societies.
The survey from the CML show that re-mortgage activity grew in the month of July, compared with June and even house purchases remained unchanged from the previous month. The number of first time buyers however, continued to fall, with only 17,300 new home loans completing in July, a reduction of 5 per cent on the previous month and down by 48 per cent from the same time last year.
On a more positive note, the CML’s figures also reveal that out of those first time buyers who did take the plunge and buy a house, the average amount of deposit had increased to 15 per cent in July, compared with only 13 per cent in the previous month, thereby giving a lower loan to value ratio and at the same time, incomes were not being stretched quite as much, with the average first time buyer only taking out a home loan of 3.24 times their income, instead of 3.33 times income in June.
It will be interesting to see what effect the Governments recent measures to encourage first time buyers will have on the market. The new higher starting point for stamp duty of £175,000 and range of shared equity schemes, may entice some of those teetering of the brink of making a decision, but others are still likely to wait until the market settles down before buying.
