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First time buyer demand increases by 33% in August, says CML

There has been an increase in demand for homes with more loans especially from first time buyers in August.

A surge in demand from first time buyers has seen 27,100 loans advanced by lenders in August up 33% on a year ago according to the Council of Mortgage Lenders (CML).

The increase has occurred ahead of the second phase of Help to Buy scheme, the government backed mortgage scheme to help buyers with small deposits get on the housing ladder.

Help for first time buyers can come from family members as the equity release buyer can access money using a lifetime mortgage to gift the deposit on a new home.

Borrowing multiples increasing

The CML also said the in August first time buyers had loans of 3.36 times their income compared with 3.25 a year ago.

Interest from first time buyers is expected to continue due to the Help to Buy scheme where a deposit of only 5% is required and government adding  a further 15% of the loan.

Even so the amount of loans have decreased in August with gross UK mortgages at £16.4 billion and slightly down on the July figure but 28% higher than a year ago.

Borrowers are opting for fixed term mortgages offering good value for money and stability for budgeting over two or three years terms.

Lending schemes driving demand

The Bank of England’s scheme Funding for Lending providers lenders with cheap funds to be offered to businesses and individuals.

It has been used mainly for the mortgage market including first time buyers, home movers, remortgage buyers and buy-to-let landlords with the risk of overheating the housing market.

Coupled with the Help to Buy scheme property prices have been increasing due to the limited supply and lack of construction.

The lack of new homes could mean remortgage buyers staying in their current property and increasing their mortgage to releasing capital which they can use to improve their home.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage cost calculator and equity release calculator.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even reduce inheritance tax owed by your beneficiaries.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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