New figures show that despite the introduction of the Funding for Lending scheme, the average deposit put down by first time buyers has hardly changed over the past year.
According to new figures from the Council of Mortgage Lenders (CML), first time buyers put down an average deposit of 19% in April, almost unchanged from the figure a year ago of 20%,
The CML’s research also showed little change in the amount of money mortgages lenders are prepared to loan to first time buyers. In April 2012, first time buyers borrowed an average of 3.16 times their income; a year later this had risen only slightly to 3.25.
One of the key aims of the Funding for Lending scheme, which started in August 2012, was to make mortgages more available to various groups who were finding it hard to secure finance. However, the CML’s figures show first time buyers are feeling almost no benefit, with the amount of deposit needed, a major hurdle to most first timers, not changing significantly over the past 12 months.
The number of first time buyers also shrank slightly in April, down 1% on March, although overall activity is up by 11% in the first four months of 2013, compared to the same period last year.
Mortgage experts are hopeful, that whilst the Funding for Lending scheme might not be having the desired result amongst first time buyers, the Help to Buy scheme, announced in the Spring, will provide a further boost.
Commenting on the figures, Paul Smee, Director General of the CML, said: “Lending to first-time buyers remains above the levels seen at the same time last year, despite the boost caused by the end of the stamp duty holiday in March last year.”
“The Help to Buy scheme announced in this year’s Budget should provide a further boost to the first-time buyer and home mover markets, but we still await further details on how the initiatives will work.” (Source: Council of Mortgage Lenders)
Elsewhere there was further bad news for first time buyers, as Moneyfacts confirmed the number of mortgage products available for people with only a 5% deposit had shrunk. According to the financial information website, buyers who wanted to borrow 95% of the purchase price currently only have 54 mortgage products to choose from; less than 2% of all mortgage products available.
Overall mortgage lending on the up
Whilst showing a patchy picture for first time buyers, the CML figures confirm that overall, mortgage lending rose in April.
The increase in lending was mainly due to a rise in remortgage activity, which rose by 10% compared to March, whilst the number of mortgages granted for purchases actually fell.
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