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First-time buyer lending hits seven-year high

First-time buyer lending hits seven-year high

Category: Mortgages

Updated: 09/12/2014
First Published: 09/12/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Mortgage loans for first-time buyers have reached their highest level for seven years, as borrowers increasingly opt to fix their mortgage rate in preparation for a rise in interest rates.

According to the latest Bank of England and Financial Conduct Authority statistics, the value of residential loans advanced to first-time buyers increased in the third quarter of the year to £12.1 billion, the highest quarterly amount since the start of the financial crisis in Q3 2007.

Further evidence of the continued uptick in the mortgage market came with the news that gross advances of residential loans had hit £55.9 billion during the three-month period, some 13% higher compared with Q3 2013 and the highest amount advanced in the third quarter of a year since 2008.

Meanwhile, the figures also revealed that mortgage borrowers continue to ready themselves for a rise in interest rates by choosing to fix their mortgage rates rather than risk a variable rate.

According to the data, almost 83% of loans advanced during the quarter were for fixed rate mortgages, making it the eighth quarter in a row that there has been an increase in the proportion of borrowers favouring fixed rates. The figure is also the highest proportion seen since the series began in 2007.

Overcome the barrier

While lenders may be increasingly willing to approve loans for first-time buyers, there will still be some seeking to take their first step onto the property ladder who struggle to secure that all-important mortgage.

However, there are things that you can do to overcome the barrier.

Saving for the deposit should be your first port of call – it may seem like an impossible task, but getting into the saving habit is the best way to go.

Once that's sorted, it all comes down to finding the right mortgage. Government schemes, such as Help to Buy, mean it's now possible to secure a mortgage with a deposit of just 5% – check out our pick of Help to Buy mortgages as a starting point – but if you can put down even more, you'll secure a lower rate.

You'll also need to do plenty of preparation to increase your chances of securing a mortgage. Go through your budget carefully, noting any areas you could cut back on to make sure you can prove affordability to your lender.

Once this is done, hopefully you'll be one step closer to securing that mortgage and putting your first foot on the housing ladder.

What next?

Compare first-time buyer mortgage deals

Find the best mortgages included in the Help to Buy scheme

Compare savings accounts to build your deposit

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.