Six-year lending high
NEW figures show lending to first-time buyers has reached its highest point for six years.
Banks handed out more than 27,000 loans worth £3.8 billion during August alone — up 7 per cent compared to the previous month, the Council of Mortgage Lenders' statistics show.
The latest data reveals mortgage lending is now at its highest level since the boom of 2007 and more than a third up on the same period last year.
And the increase in those first-time buyers getting hold of credit came before the Government launched its controversial Help to Buy scheme where taxpayers would back mortgages for people with only five per cent deposits.
The CML figures showed that first-time buyers stretched their borrowing in relation to their income in August, borrowing 3.36 times their salary typically, which was a jump from 3.31 in July. The latest figure marks the highest borrowing ratio seen for first-time buyers since 2007.
Despite these borrowers stretching themselves more, current low interest rates on mortgages are helping to keep their monthly mortgage payments relatively affordable. The typical first-time buyer monthly mortgage repayment now represents 19 per cent of their income, edging down from 20 per cent a year ago.
The CML figures also showed that 34,200 mortgage deals worth £6 billion were advanced to home movers in August, marking the highest number seen since mid-July.
A record 86 per cent of mortgage borrowers took advantage of the cheap deals currently on offer by taking out fixed-rate mortgages in August, the CML said, with 94per cent of first-time buyers opting for a fixed-rate deal.
The latest figures come in the same week that the second phase of Help to Buy was fired into action to give credit-worthy borrowers with low deposits a helping hand to buy a mortgage, with lenders offering state-backed products.
Royal Bank of Scotland and NatWest started offering mortgages under the scheme on Tuesday and have previously reported appointments being booked out for this week amid strong levels of interest.
Santander, HSBC, Lloyds Bank, Virgin Money and Aldermore have all confirmed they plan to join up and have not yet given details of their products.
Lenders which are not part of the second phase of Help to Buy are also stepping up competition to better these deals.