Uk Mortgage Lending to first time buyers increases

SUTTON COLDFIELD, U.K. - April 23, 2013 - PRLog -- The first-time buyer sector saw a 17 per cent increase in February compared to February last year, and if combined with the January figures reached the largest number of first time buyers in the first two months of the year since 2008. On the flip side, lending to home movers fell in the same period, contributing to an overall dip in UK mortgage lending for house purchases.  The CML also reported that remortgage lending also eased slightly in the same period.

UK First time buyers

In total 16,400 UK mortgage loans were advanced to first time buyers in February 2013, up on the 15,900 in January and 14,000 at the same time last year. By poundage amount UK mortgage loans to first time buyers totalled £2 billion, the same amount as the previous month, but 18 per cent higher than in February 2012, when it was just 1.7 billion. First time buyers accounted for 43% of all house purchase mortgage loans in the UK in February. This represented the sixth consecutive month that this particular indicator has been at or above 40%, suggesting that the UK mortgage market conditions continue to improve for first time buyers.

Indicators of mortgage loan affordability have also suggested that the market was marginally more favourable for first time buyers in February. First time buyers typically borrowed a smaller amount on average in February than in January, both in absolute terms and relative to their income. First time buyers typically borrowed around 3.19 times their income in February, marginally down from the 3.2 times in January, while the average loan-to-value ratio remained at 80%. These changes are likely to be associated with a shift towards first time buyers purchasing less expensive properties, illustrated by a small increase in the proportion of properties bought for less than £125,000.

UK Home movers

UK mortgage lending to home movers fell in February for the third consecutive month. In total 21,500 mortgage loans were advanced to borrowers who moved in February, down around 4 per cent compared to January and a fall of almost 3 per cent on February last year. By poundage value, home movers were advanced £3.5 billion in February, representing a 5% fall compared to January. Recent valuation statistics have reported small increases in activity during recent weeks suggesting this trend may be reversed shortly.

UK House purchase lending

The underlying trend for resilient house purchase mortgage lending in the UK continued in February, with mortgage lending stronger than a year earlier. A total of 37,900 mortgage loans (worth £5.5 billion) were advanced in February, up by 5% on the same time last year (36,400 loans). Month on month, house purchase mortgage lending in the UK dipped in February compared to January when 38,200 loans were advanced.

UK Remortgage lending

Remortgage lending in the UK remained fairly subdued in February, down compared to both the previous month and to February 2012. In February, £2.6 billion of remortgage lending was advanced to borrowers, representing a 13% fall compared to January (£3 billion), and 28% lower than February last year (£3.9 billion). Commenting on the data, the CML director general said: "First time buyers are continuing to take advantage of more favourable market conditions, helping to drive the underlying trend for resilient house purchase lending. We hope that the new initiatives announced by the government in the 2013 Budget will further stimulate first time buyer activity but also help those 'second steppers' looking to move into a new home."

It is believed that the main reason for the drop in remortgage lending in the UK is attributed to the fact that a high percentage of homeowners are on their lenders’ low standard variable rate or on a low margin tracker rate which they do not want to sacrifice. This factor may also explain the record month of UK secured loan lending for almost 4 years as more and more people turn to a separate secured loan when raising additional funds rather than remortgage.

UK Secured loan lending

Secured loans in the UK are available to many borrowers  and come in many forms which include, but are not limited to: debt consolidation loans, home improvement loans, car purchase loans, bad credit loans, adverse credit loans, self employed loans and special purchase loans. The most common use of Uk secured loans is for debt consolidation with in the region of 75-80% of all secured loans having an element of debt consolidation. As UK secured loans are available for almost any purpose many loans are used for multiple purposes which allow people to raise additional finance whilst at the same time clearing existing credit to give them just one manageable monthly payment.

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