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Mortgage Lending on the Up

Mortgage Lending on the Up

By Kris White

The latest data released from the Council of Mortgage Lenders showed that first-times buyers are still taking advantage of relaxed lending rules and cheap rates. Loans were up 24% on the previous quarter, and up almost one-third compared to the same quarter last year.

Paying the price

However, first-time buyers in the capital still have to dig deeper into their pockets to secure a foothold on the ladder. The data shows that the perks of living in London come at a price – with first time buyers having to borrow almost four times their salary (3.74 times) on average. This is up slightly on the previous quarter and may well be a result of the continuing rise in house prices across the capital.

Upping the stakes

It remains to be seen whether this figure will increase again next quarter, but certainly more potential buyers in this sector will put even greater pressure on the housing stock. If supply fails to keep up with demand, first time buyers will be even more financially pressurised.

Buyers will need to get creative and might need to look outside their preferred location and budget to secure a property. Indeed, fewer buyers are now able to buy under the stamp duty threshold of £125,000 – with only 3% managing to do so last quarter. More first time buyers (11%) are pushing their budgets to the limit and purchasing properties valued at over £500,000, which means finding an extra 4% for stamp duty.

Although this sounds like a staggering sum for first time buyers to find, it’s worth remembering that many have spent years saving for a deposit during the harsh period of radically reduced lending in this sector. Now that banks are once again befriending first time buyers, many have a sizeable sum tucked away and will be higher up the career ladder – enabling them to jump a few rungs up the property ladder in one transaction.

While the banks continue to lend, this backed-up sector will continue to take the opportunity to purchase property and move out of rentals, shared housing, or the parental home.