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Lending to first-time buyers soars by 50%

Lending to first-time buyers soars by 50%

Category: Mortgages

Updated: 02/07/2013
First Published: 02/07/2013

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 It is now over 6 months old so the content may be out of date.

Over 32,000 people achieved the dream of purchasing their first home during the first five months of this year, with total lending from building societies rising annually by 50%.

Total gross mortgage lending from mutuals reached £3.5 billion during May, up from £2.7 billion reported in May 2012. Over the first five months of 2013, the value of home loans issued by building societies climbed to £14.5 billion, as borrowers raced to take advantage of low mortgage rates sweeping the market over recent months.

The number of mortgage applicants approved for a loan climbed to a three year high during May this year, with 31,111 loans advanced at a value of £3.8 billion compared with £2.9 billion during the same month in 2012.

As well as a surge in activity from eager mortgage borrowers, figures released by the Building Societies' Association (BSA) showed mutuals increased their market share to 24% compared with 20% during the first five months of 2012.

Paul Broadhead, head of mortgage policy at the BSA, said: "Building societies and other mutual lenders continue to play a dominant role in supporting members of the UK public looking to buy a new home.

"While total net mortgage lending across all other lenders dropped by £3.4 billion in the five months to May, net mortgage lending by the mutual sector increased by £4.0 billion.

"Supporting first time buyers is very much part of the sector's ethos and in the first five months this year the number of loans to this group jumped by 50% compared to last year. Importantly, as deposits remain a clear barrier to home ownership, building societies and other mutuals have made over two and a half times as many loans to first time buyers with a deposit of 10%.

"On the savings side, the strong inflows suggest that mutuals are offering attractive products despite the challenges for providers and savers alike in relation to generally low interest rates across the market," he concluded.

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