First time buyers are the life blood of the property market, but according to the Council For Mortgage Lenders, the number of FTB’s is at the lowest levels since 2007.
So where have all the first time buyers gone?
Let’s look at some facts and figures. First time buyers accounted for 35% of all house purchase mortgages in May, down from 39% in March and 38% in April 2009.
In terms of total mortgage lending to FTB’s there were 40,000 loans advanced for house purchase in April worth £5.7 billion, down from 45,000 (worth £6.3 billion) in March but up from 35,000 (worth £4.5 billion) in April 2009. April’s seasonal dip was expected due to the Easter break.
So just at the time that you thought that house prices were recovering, those vital buyers at the bottom of the property ladder are falling in number.
I think we can guess why. I suspect that it is the problem that FTB’s have in getting mortgages. Even though there are a few more 90% LTV mortgages available, most FTB’s are required to supply a 25% deposit. Overall, the average home move borrowers 67% of their home’s value, according to the CML.
No wonder that so many renters will not be buying their home for quite a while.
Until lending to first time buyers eases even more, then I believe that the house market will just bubble along without any real momentum. Economic risks and problems are not helping either, as Michael Coogan, director general of the CML, explains:
“Lending for house purchase still looks modestly positive compared to 2009. But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income.”