Mortgage & housing round up: A week of good news for first time buyers, whilst house prices rise


Mortgage & housing round up: A week of good news for first time buyers, whilst house prices riseOur housing and mortgage round up this week includes two stories which will give encouragement to any would-be first time buyers hoping to get onto the housing ladder in 2013, despite the average deposit needed still being way out of reach for many.

We also look at why some of us are turning into permanent renters, whilst a new survey shows house prices actually rose in 2012.

Official figures show house price rise

New figures from the Office for National Statistics (ONS) show that house prices rose by 2.1% in the 12 months to November, taking the value of the average home in the UK to £232,000.

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The annual rise was mostly drive by London and the South East, where prices rose by 5% and 3% respectively; the average house price in the nation’s capital is now £393,000.

Not all regions experienced such strong growth, with Scotland registering a 1.1% fall, whilst house prices in Northern Ireland dropped by a massive 8.5% over the past 12 months.

However, the ONS figures are starkly at odds with the other three main house price surveys; the Nationwide and Halifax house price surveys both show falls in house prices over the past 12 months, while the Land Registry survey reveals a more modest increase. Furthermore, the three surveys show the average house price to be between £161,000 and £164,000, significantly lower than the ONS figure.

First time buyers boost mortgage lending figures

The latest figures from the Council of Mortgage Lenders (CML) show a significant rise in the number of mortgage approvals in November.

The total number of mortgage approvals rose to 52,700 in November, up 6% on October and 13% on this time last year.

Much of the rise was driven by first time buyers, who rose in number by 8% on the previous month and by a quarter since the same time last year. According to the CML the number of first time buyers is now at the highest level for three years, whilst the total number of mortgages granted was the highest in any November since 2007.

One of the main reasons behind the increase in mortgage approvals seems to be the government’s Funding for Lending Scheme (FLS) which was set up to encourage banks and building societies to lend to those individuals and businesses who had previously found it hard to get credit. Despite a slow start the FLS now seems to be having some effect.

The CML’s Director General, Paul Smee, said: “Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending, suggesting that the underlying trend for year-on-year increases should continue.”
Smee continued: “We expect the Funding for Lending scheme to continue to encourage a downward drift in interest rates. This may prompt an increase in remortgage activity as borrowers seek to take advantage of lower rates.”

More good news for first time buyers

The good news for first time buyers continues, with the release of figures from chartered surveyor e.surv, which show the number of first time buyers with a low deposit has risen to the highest level since the start of the financial crisis.

e.serv also found that lending to first time buyers had increased by 11% in 2012, but warned that the full effects of the Funding for Lending Scheme have yet to be felt. Richard Sexton, business development director of e.surv chartered surveyors, said:

“Funding for Lending hasn’t yet equated into more loans to first time buyers. But this still remains a realistic prospect. The scheme won’t begin to have a full effect until 2013, and lenders are acutely aware the only way the mortgage market will recover to its pre-financial crisis high is if the first-time buyer market is jump started.”

Not all good news for first time buyers

In the same week that e.serv published their figures a different report has shown that first time buyers still have a significant hurdle to get over if they are to get onto the housing ladder.

The research, produced by mortgage provider Castle Trust, showed that the average first time buyer will need a deposit of £26,500.

Sean Oldfield, Chief Executive Officer at Castle Trust said: “Parents and grandparents are being called on more and more to help children with their first deposit and the proportion of the population owning their own home without family help is likely to continue to fall. Aspiring homeowners need alternatives to borrowing from family which is why the government has launched a range of initiatives including NewBuy and FirstBuy.”

In addition to the government’s various schemes, would-be first time buyers will hope that the Funding for Lending Scheme heralds the introduction of more high loan to value mortgage options in 2013.

Shift towards renting continues

The shift towards renting rather than buying, which started after the financial crisis, looks set to continue according to one national letting agent.

Dorian Gonsalves, CEO of Belvoir Lettings, which has branches throughout the country, said: “An analysis of data from Belvoir offices confirms that there has been a change in cultural attitude towards renting property in the UK and that this change is likely to be permanent.”

Gonsalves continued: “Belvoir Lettings predicts that the private rental sector is likely to remain a popular choice for 2013, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying. We also predict that renting will continue to offer good value for money for tenants and advise landlords to seek specialist advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are minimised.”

The rental and buy to let market has seen strong growth over the past few years as property prices have fallen, making them more affordable. Other factors, including rising rents and investors looking for an alternative way to make a return, with interest rates at all-time lows and stock markets continuing to be volatile, have also played their part in creating a bullish buy to let sector.

Our mortgage adviser, Linda Wood , is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email

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