The number of first-time buyers is on the rise, with a 38% rise in the amount of first-time buyers over the last 12 months. However, this may lead to a housing bubble, experts fear.
The increasing amount of mortgages acquired by first-time buyers has led to an increase of 55% in the value of loans given out; 21,800 loans were given out to first-time buyers worth £3.1bn. Furthermore, the average Loan to Value (LTV) ratio has risen from 80% to 82%, meaning lower deposits are more common, and that progress is being shown towards the government’s aim to make 95% mortgages more readily available.
One of the main factors in these changes are the government’s Help to Buy scheme which allows homeowners to get 95% mortgages by sweetening the deal for the mortgage lenders.
However, the 82% average LTV is still a ways off the recorded average 90% LTV seen in 2006 and 2007.
Buy-to-let investors are also coming back into the market, with a 34% increase in landlord loans from the previous year. This all adds to getting the housing market moving.
There is fear of a new housing bubble however. “The Council of Mortgage Lenders’ data will sustain concern that we are on the road to a new housing bubble. While mortgage activity is still not that strong compared to long-term norms, there is currently appreciable upward momentum”, so said the chief UK economist at IHS Global Insight, Howard Archer.
