17 Jan

More first-time buyers as mortgage affordability improves

Source: www.whathouse.co.uk

There was a rise in the number of first-time buyers in 2011, thanks partly to the fact that mortgage borrowing rates were at their most affordable for 14 years, research shows.

The Halifax says that mortgage payments for a new borrower in the second half of 2011 were at their lowest as a proportion of disposable earnings for 14 years, due mainly to cheaper property prices and mortgage borrowing rates.

Typical mortgage payments for new homebuyers at the long-term average loan to value ratio were 27% of disposable earnings in the fourth quarter of 2011, significantly below the average of 37% recorded 27 years ago, and 29% in the fourth quarter of 2010.

The research suggests that mortgage payments have almost halved as a proportion of income in recent years from a peak of 48% in the third quarter of 2007.

First-time buyers -  The latest Mortgage Monitor from e.surv suggests that first time buyer numbers increased markedly last year banks upped their high loan-to-value lending and loosened qualifying criteria on high loan-to-value mortgages.

There were 32% more loans with a deposit of 15% or under in 2011 than in 2010, as lending conditions for first time buyers improved.

There were 57,301 loans with a deposit of 15% or under in 2011, up from 43,379 in 2010, showing that more buyers with lower incomes were able to secure mortgages,.

"The market has defied the wider problems that afflicted the economy in the latter half of last year.  The improvement in 2011 is modest, but when taken against the backdrop of the eurozone cirsis and turgid economic growth, it's clear the market demonstrated real staying power last year," said Richard Sexton, director of e.surv.

Prospective property purchasers looking to take advantage of historically low mortgage borrowing rates will find plenty of new homes to choose from nationwide.

There are added advantages for first-time buyers currently looking to buy a new home, with a number of housebuilder initiatives to help cover the deposit on a new house or apartment, while the Government has introduced a mortgage indemnity scheme to help first-time buyers get on the property ladder.