Mortgage loans advanced to first-time buyers across the country declined in both volume and value over the first three months of this year mostly due to seasonal effects, experts say.
First-time buyers in Greater London borrowed £2.4 billion between January and March, representing 10,100 loans. Compared to the last quarter of 2014, this was a 16 per cent decline in both value and volume. In an annual comparison, the drop in value was 11 per cent and the decrease in volume was 14 per cent.
First-time buyers in Wales borrowed £260 million representing 2,400 loans. On a quarterly basis this was a 24 per cent fall in value and a 25 per cent decline in the number of loans. Compared to the first quarter of 2014, total number of loans was down 8 per cent but the amount borrowed remained stable.
First-time buyers in Northern Ireland took out a total of 1,400 loans, with a combined value of £110 million. The drop compared to the fourth quarter of 2014 is considerable — 35 per cent in value and 30 per cent in volume. Compared to the first quarter of 2014, the number of loans decreased by 13 per cent and the value of these loans fell by 8 per cent.
First-time buyers in Scotland borrowed £580 million representing 5,400 loans, down by 24 per cent in value and by 23 per cent in volume compared to the last three months of 2014. The value of loans was 2 per cent below that in the first quarter of 2014 and the number of loans was down by 7 per cent.
Mortgage experts agree lending was affected by seasonal factors
Julie-Ann Haines, chair of CML Cymru, commented:
“There is a usual seasonal dip in the first quarter of the year and the Welsh market performance has been largely consistent with the UK overall. This is still the second best quarter one lending level, after last year, for first-time buyers and home movers since 2008.
“We predict activity will pick up heading into the summer months, and with affordability in Wales remaining better than the UK overall, with a much smaller average deposits and a lower proportion of monthly income spent on repayments, the conditions are good for those seeking to own a home.”
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Derek Wilson, chair of CML Northern Ireland, commented:
“Lending in the beginning of the year is usually muted, as seen in the UK overall, due to seasonal factors but there are still encouraging signs the market is continuing to recover. This is the second best performing first quarter of a year for house purchase activity since 2007, just less than last year’s level. The number of people remortgaging is higher this time than the two previous first quarters of the year, and affordability remains much better than the UK overall.
“We will likely see activity pick up as we head towards the summer months and with competitive rates on offer there are options out there for those looking to buy a home or seek a new mortgage deal.”
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Linda Docherty, chair of CML Scotland, commented:
“Seasonal factors play a part in the lull commonly seen in lending activity during in the beginning of the year, as seen across the UK this period. What is encouraging is that home movers have been increasing year-on-year and first-time buyer and remortgage levels are relatively consistent with last year.
“It is likely that we will see an upward trend in lending moving forward as we approach the summer months. The introduction in Scotland of the Land and Buildings Transaction Tax will mean the majority of new borrowers paying less tax, which should also provide a boost to the market.”
