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More First-Time Buyers Are Purchasing Homes

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Alternatively, a reflection that in some of the UK prices have fallen to the level that £125,000 can buy a half-decent three bed semi.

+ 1

Lower prices = more sales

Then once folks hear a few falling knife stories the decreases speed up.

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The article only shows a higher _proportion_ of mortgages going to first time buyers, not a higher _number_ of them.

It could be that richer folk with cash are not bothering to get big mortgages anymore. Can't tell from the article.

Edit: it says something about approvals, but approvals != purchases right?

Edited by the_duke_of_hazzard

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CML

http://www.cml.org.u...edia/press/2915

Also very interesting comment particularly on IO mortgages

- tables omitted because they don't format well

- emphasis mine

The balance between house purchase and remortgage lending tipped towards remortgaging at the start of 2011, according to the Council of Mortgage Lenders. Remortgaging accounted for 37% of all lending in the quarter, an increase from 30% in the last quarter of 2010.

The number of loans advanced for house purchase in March increased by 24% to 37,800 from February, and the value increased by 26% to £5.4 billion. While this is a significant increase compared to the start of the year, house purchase lending activity is still below the levels seen at the same time last year – down 17% in volume and 16% in value.

There were 33,900 loans for remortgage, worth £4.1 billion, advanced in March, up 16% by volume and 17% by value compared to February and up 17% by volume and 13% by value compared with March 2010.

Looking at the first quarter as a whole, house purchase lending was down 26% by volume and 27% by value from the last quarter of 2010. Remortgage lending was up 14% by volume and 11% by value from the fourth quarter.

The increase in remortgage activity is likely linked to the expectations of an increase in interest rates. Although any significant rise in rates is unlikely, recent increased sentiment in favour of remortgaging looks set to be reflected in a strengthening of remortgage lending over the next few months,

14,600 mortgages, worth £1.7 billion, were advanced to first-time buyers in March, an increase of 28% in volume and 31% in value from February, but a fall of 17% in volume and 16% in value compared to March 2010.

Home movers also saw an increase from February, with the 23,200 mortgages, worth £3.7 billion, up 22% by volume (23% by value) from February but, as with first-time buyers, down 17% by volume (16% by value) compared to a year ago.

The number of mortgages to both first-time buyers and home-movers fell on a quarterly basis. First-time buyers fell 23% and home movers 28%.

Lending criteria throughout the first quarter have stayed relatively unchanged for both first-time buyers and home movers. First-time buyers borrowed on average 79% of the value of their property in March, and in the first quarter as a whole. Home movers faced a similar picture. In March and the first quarter they borrowed on average 68% of the value of their property.

From 2007, there has been a clear shift away from interest-only mortgages, in particular for first-time buyers. Prior to the financial crisis it was typical for around 30% of loans to first-time buyers to be on an interest-only basis. In March 2011, only 4% of first-time buyers took out an interest-only mortgage.

Michael Coogan, CML director general, said:

"We saw a significant increase in both house purchase and remortgage lending in March but, over the first quarter of the year as a whole, the picture was subdued and that is unlikely to change for the foreseeable future.
"Looking ahead to lending figures in the coming months, the Easter, royal wedding and May bank holidays will impact on the level of activity, timing and spread of completions in the second quarter meaning that any one month's data should not be interpreted as a reflection of a trend. It may take until publication of the second quarter's activity to get a full understanding of how the market has reacted to the squeeze on household incomes."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey.

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.

4. The April 2011 data will be released on Tuesday 14 June 2011.

BBC take on it:

http://www.bbc.co.uk...siness-13387462

Expectations of interest rate increases led to larger numbers of homeowners remortgaging in March, UK lenders say.

There were 33,900 remortgage loans advanced during the month - up 16% compared with the previous month, the Council of Mortgage Lenders (CML) said.

The figure is 17% higher than the same month a year ago.

Home loans for house purchases also proved to be more popular, although the lenders' body said the market remained "subdued".

The number of these loans was up 24% compared with the previous month. However, it was 17% down on March 2010, and the CML warned against reading too much into one month's figures.

"We saw a significant increase in both house purchase and remortgage lending in March but, over the first quarter of the year as a whole, the picture was subdued and that is unlikely to change for the foreseeable future," said CML director general Michael Coogan.

He said that the string of bank holidays could have affected mortgage market activity since March.

Edited by koala_bear

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The article only shows a higher _proportion_ of mortgages going to first time buyers, not a higher _number_ of them.

It could be that richer folk with cash are not bothering to get big mortgages anymore. Can't tell from the article.

It actually doesn't show anything about the number or proportion of mortgages going to first time buyers. As Matt Griffiths said:

The increase in lower value properties on the market may be a general indication of a falling market, rather than first-time buyer activity. It also doesn't indicate who is buying these properties – there have been recent signs that lenders are favouring buy-to-let over first-time buyers, who also have a high footprint in these lower segments in the market.

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Table 1: Loans for house purchase and remortgage March 2011

Number of house purchase loans 37,800

Value of house purchase loans £ 5,400m

Number of remortgage loans 33,900

Value of remortgage loans, £4,100m

Average purchase loan £142.8k

Average purchase loan £120.9k

Table 2: First-time buyers, lending and affordability March 2011

Number of loans 14,600

Value of loans £1,700m

Average loan to value 79%

Average income multiple 3.15

Proportion of income spent on interest payments 12.9%

Average loan value £116.4k

Average deposit £31.0k

Average Purchase price £147.4k

Average earnings (is some of this joint?) £37.0k

Average net earning after tax + NI (Monthly) £2,300

Average monthly income spent on interest £297

Average IR 3.05%

% FTB on repayment mortgages 96% (makes change!)

--> It would appear there is some sensible lending going on some where (it isn't anywhere near me though!)

Table 3: Home movers, lending and affordability March 2011

Number of loans 23,200

Value of loans £3,700m

Average loan to value 68%

Average income multiple 2.85

Proportion of income spent on interest payments 9.7%

Edited by koala_bear

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The article only shows a higher _proportion_ of mortgages going to first time buyers, not a higher _number_ of them.

It could be that richer folk with cash are not bothering to get big mortgages anymore. Can't tell from the article.

Edit: it says something about approvals, but approvals != purchases right?

I guess I am included in these figures, I get a mortgage approval every 3 months or so from one of my many savings providers. They generally offer me about £90k with a 75% LTV.

I have no intention of actually buying until I can get a decent 2 bed house for under 100k, so a couple of years off yet probably.

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I guess I am included in these figures, I get a mortgage approval every 3 months or so from one of my many savings providers. They generally offer me about £90k with a 75% LTV.

I have no intention of actually buying until I can get a decent 2 bed house for under 100k, so a couple of years off yet probably.

CML is based on advances not approvals so you aren't...

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I guess I am included in these figures, I get a mortgage approval every 3 months or so from one of my many savings providers. They generally offer me about £90k with a 75% LTV.

I have no intention of actually buying until I can get a decent 2 bed house for under 100k, so a couple of years off yet probably.

Does that not leave an imprint on your credit record?

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CML is based on advances not approvals so you aren't...

out of interest (and forgive my ignorance as not 100% familiar with these stats - or stats in general) - is the price/earnings ratio that of:-

(house purchase price - deposit)/individual income

or

house purchase price/individual income

is total household income here? i.e. when I bought first house it was 3* my income and didnt include my partners income (back in 1994!) - so house price was three times my income but 1.5 times household income...

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Does that not leave an imprint on your credit record?

Possibly not if you are already a customer and it is not for a particular property but just indicative of what they might offer you when the time actual came to buy.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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