More first-time buyers are getting on the ladder | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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 It is now over 6 months old so the content may be out of date.

Published: 18/05/2017

It's never easy to take that first step on the housing ladder, but happily, more and more people seem to be doing just that, with new figures from the Council of Mortgage Lenders (CML) revealing that first-time buyer activity jumped up in March, as growing numbers secured that all-important first mortgage.

The figures show that first-time buyers borrowed £4.9 billion to buy a home in March, a huge increase of 29% from February, as well as marking a rise of 9% year-on-year. This equates to 31,500 loans, up 30% month-on-month and 12 year-on-year – only 24,200 first-time buyers took that first step in February and just 28,100 did a year ago, with the latest figure being the highest seen so far this year.

Not only that, but more loans were advanced to first-time buyers in March this year than in any month of March since 2007, highlighting a definite improvement. This is backed up by additional findings from Connells Survey & Valuation, which show that first-time buyer valuations accounted for 34% of market activity in April, easily taking the lion's share.

This is up from 32% in March, too, continuing the trend of recent months. "First-time buyers have been responsible for more than 30% of valuation activity for over 12 months," said John Bagshaw of Connells, "as more aspiring homeowners get their first foot on the ladder."

This is certainly welcome news, and comes in spite of affordability challenges remaining heightened. After all, wage growth is stagnating and house prices are still high, and although there's been signs of house price growth slowing recently, they're not exactly cheap by anyone's standards.

However, mortgage rates are still at record lows, and this appears to be key. Indeed, further figures from the CML show that the proportion of income first-time buyers now have to devote to mortgage payments continues to remain among historic lows, with just 17.2% of household income going towards such costs.

This is despite the fact that the typical first-time buyer mortgage size increased slightly, rising from £132,200 in February to £133,500 in March, while the average household income remained at £40,000 (giving an income multiple of 3.53). Meanwhile, the average loan-to-value (LTV) edged down to 82.2%, suggesting that first-timers are able to stump up more of a deposit, which hopefully means they'll be able to secure a better mortgage rate.

"It remains incredibly difficult to save for a deposit, but the lower cost of borrowing, combined with less competition from landlords, has meant more first-time buyers have been able to purchase a home," added John Bagshaw, with buy-to-let activity remaining subdued in light of recent tax changes.

Nonetheless, this is all great news for first-time buyers, and the trend looks set to continue. Paul Smee, director general of the CML, said that first-time buyer lending is "expected to maintain momentum in the light of the very attractive deals currently available", which means now could be a great time to get on board!

After all, there are plenty of first-time buyer mortgages to choose from. Moneyfacts' data shows that there are currently 286 mortgages available at 95% LTV, and another 630 at 90% LTV, both of which are prime first-time buyer territory.

Deals that require a deposit of just 5% could be particularly suited to those struggling to save a more significant sum, and although mortgage rates are higher at this level, they're not too prohibitive: the average two-year fixed mortgage rate at 95% LTV comes in at 4.20%, while the five-year equivalent is 4.56%, so don't let a small deposit hold you back.

However, if you can stump up a slightly bigger deposit, it could pay off – not only are there far more deals available at 90% LTV, but the average two-year fixed rate at this level is just 2.74%, according to the latest Moneyfacts UK Mortgage Trends Treasury Report, while the five-year equivalent clocks in at 3.34%.

Remember that these are just averages, too; you can find far lower rates by checking out our Best Buys to find the best first-time buyer mortgages on the market, so start comparing the options to see if you can be one of the thousands getting on the ladder this month.


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