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First time buyer demand grows to highest level in over 5 years

23-Feb-2015

An increasing number of people are getting onto the property ladder, according to new findings.

Research published by chartered surveyors e.surv revealed that mortgage approvals in the UK have seen the fastest month-on-month growth in over five and a half years.

Its data showed that there were 65,778 house purchase approvals in January but on an annual basis they fell 12.9 per cent.

In addition, the research showed that loans to higher LTV borrowers grew 20.1 per cent between December and January.

The first month of 2015 saw 10,064 loans to borrowers with deposits worth 15 per cent or less of their property’s total value, compared to 8,378 in December.

Speaking about the findings,  Richard Sexton, director of e.surv chartered surveyors, said: "Lenders have a desire to return to growth and the January lending uptick is testament to this, as borrowers key in to mortgages while interest rates remain at historic lows. However, undoubtedly, some potential borrowers remain thoughtful about the approaching election and are playing a waiting game.

"Whilst the Mortgage Market Review and LTI caps are preventing what has previously been perceived as higher risk lending, equally we have Help to Buy supporting and encouraging first time buyers."

Mr Sexton added that many first time buyers are finding it easier to get on the property ladder with smaller deposits due to lenders increasingly offering lower prices to attract consumers.

A separate First Time Buyer Opinion Barometer from Your Move and Reeds Rains suggested that January’s month-on-month increase in mortgage approvals may potentially boost the number of first time buyers.

However, there was also some evidence that the heightened demand from first time buyers has helped to limit the supply of housing.

New analysis from the Office of National Statistics showed that if the number of households in England grows to 24.3 million in 2021 as has been predicted, an additional 221,000 people per year would need to be built.

The ONS data also showed that the number of properties being sold in the UK almost halved from a peak of 1.67 million in 2006 to 0.86 million in 2009. 

However, over the last six years or so, the number of sales has partially recovered, increasing to 1.07 million in 2013.

On the other hand, deposits are becoming much more affordable, as the analysis revealed that since 2009, deposits for first-time buyers have steadily fallen, although figures remain among the highest for the last 25 years.
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Interest rates are low but could rise? Is this a good time to buy?

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