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First-time buyer activity increases

First-time buyer activity increases

Category: Mortgages

Updated: 13/02/2014
First Published: 13/02/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The mortgage market has been picking up recently and it seems first-time buyers (FTBs) are at the forefront of this activity.

The Government has been trying to help FTBs get on the property ladder with various schemes, most notably Help to Buy, and it looks as if some of these methods - coupled with record low interest rates - could have helped to boost FTB numbers.

According to the Council for Mortgage lenders, there were 79,400 loans, worth a total of £10.9 billion, advanced to FTBs in the three months to December 2013 – indicating that these incentives have had the desired effect.

Getting on the housing ladder will be a relief for many, but there is no point if you can't afford the repayments. FTBs are typically borrowing around 3.43 times their gross annual salary, a little up on the 3.38 multiple of a year before. However, there seems to be good news in this arena as well with FTBs, on average, spending 19% of their pre-tax income on mortgage payments, down from 20% the same time last year, suggesting wages may be creeping up a little and rates are remaining low.

In even better news, there are many fixed rate deals out there offering security that rates won't rise for a while and letting you settle into regular payments. It seems that FTBs are taking advantage of these too with 95% of those first-time buyers taking out a mortgage in December opting for a fixed rate product.

Sylvia Waycot, editor of Moneyfacts.co.uk, said: "Money is always tight when you first jump onto the housing ladder which is why getting the best rate is so vital. Towards the end of last year most of the better fixed rates came from building societies, but since then banks have started to fight back so shouldn't be overlooked. There is also resurgence in variable rate mortgages on offer for 95% loan-to-value such as we haven't seen since 2008."

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