The first half of 2014 saw 30,000 more first-time buyers get on the housing ladder than in the first half of 2013, new research shows.
Figures from LSL Property Services show there were 146,600 first-time buyer transactions between January and June this year, up 27 per cent from 115,700 in the same period last year.
Last time the opening half of a year saw more first-time buyer sales was in 2007 (181,500 transactions), before the financial crisis began to bite.
The average first-time buyer deposit was £24,530 in June, falling 18 per cent from £29,845 over the last twelve months.
At the same time, first-time buyer purchase prices have stayed fairly stable. The average first-time buyer mortgage rose 2.9 per cent over the last year to £119,743, while prices have stayed flat but deposits have fallen.
LSL commercial director David Brown says the bottom of the market is recovering, while the more expensive end of the market is starting to slow down.
“Lenders have been more willing to lend to higher loan-to-value borrowers. Help to Buy has boosted confidence and with it demand among first-timers who have been carefully saving up for their deposit.”
However new Bank of England rules – which will cap most mortgage loans at 4.5 times a borrower’s income – could have a “stifling” effect on first-time buyers, Brown says.
“[The loan-to-income caps] have understandably been designed to prevent too much ‘risky’ lending to borrowers with smaller deposits, but they need careful interpretation to ensure they do not cut good buyers – with realistic and very affordable borrowing expectations – out of the market.”
