THE PROPERTY EXPERT
Despite the slight chill in the air with the rate of growth in proper ty values over the last three months (most noticeable in the overheated southeast) first-time buyers made it hot and sunny by continuing to pile into the proper ty market, at what could be the top of recent price surges.
The most recent figures from the Council of Mor tgage Lending (CML) revealed that lending to first-time buyers hit record levels; a seven-year high in fact.The number of loans was the highest since December 2007 at 28,600 - an increase of 7.1% since May and 18.7% since June 2013.The amount borrowed is also at levels not seen since September 2007, at £4.2bn for the month, a significant increase from May at £3.8bn and since June last year at £3.3bn.
The simple wish to own their own home clearly seems to be what is spurring them on to determinedly challenge high house prices and the looming interest rate rises.This has been assisted by the relatively low level of interest rates, which saw payments remain ‘manageable’ in June at 19.3% of gross income spent in ser vicing capital and interest rate payments, slightly down from 19.5% due to rising wages. On the swings side the average age of first-time buyers also fell from 30 to 29 in June and the average household income rose from £36,700 from £35,700. But, on the roundabouts side, due to the exceptional house price hikes over the last year, the average deposit for first-time buyers rose to £30,966 in June, compared to £29,250 a year ago.
“More people are borrowing larger amounts,” said Sophie Chick, analyst at Savills. “I believe it [the rise of first-time buyers entering the market] is par tly to do with pent up demand from the downturn and also that the desire to own a home is still sky high.”
However - and this is not intended to forecast rain clouds developing in the current blue skies - the Bank of England’s new control measures came into effect at the end of June, which made it harder to borrow a high loan to income mor tgage, and this may or may not, according to which source you read, lead to a reduction in borrowing and impact on the number of first-time buyers – but as the figures will not be available for a while it is probably as difficult to predict as accurately as the weather!