The number of loans taken out by first-time buyers reached the largest monthly total since the end of 2009 in November, according to new data released by the Council of Mortgage Lenders.
Lending to home movers also increased, while remortgage lending was down against the previous month and the same period in 2011.
A total of 21,700 loans were advanced to first-time buyers in October, worth £2.7 billion, representing an 8 per cent rise compared to October and up by 24 per cent on November last year.
For the second consecutive month, loans to first-time buyers accounted for 41 per cent of all house purchase loans. This is rather higher than the usual proportion of around 38 per cent.
Indicators of loan affordability remained stable in November, with the median loan-to-value (LTV) ratio staying at 80 per cent while the percentage of income consumed by initial interest and capital repayments was unchanged at 20 per cent
A total of 31,100 loans worth £5 billion were advanced to home movers in November, representing a 5 per cent increase compared to October and up by 6 per cent on the same period in 2011.
Home movers typically borrowed 2.86 times their income in November, down from 2.90 in October, while the percentage of income consumed by initial interest and capital repayments ticked down to 19.1 per cent.
As a result of the rise in loans to first-time buyers and home movers, total house purchase lending increased in November.
A total of 52,700 loans were advanced in the penultimate month of the year, up by 13 per cent compared to the same period in 2011, and up by 6 per cent compared to October. By value, house purchase loans were worth £7.7 billion in November, a rise of 10 per cent on November last year and 4 per cent compared to October.
Remortgage lending fell in November, continuing to run below year-earlier levels. A total of £3.2 billion was advanced, down from £3.5 billion in October and 26 per cent lower than the same period in 2011.
Commenting on the data, CML director general Paul Smee said: “Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending suggesting that the underlying trend for year-on-year increases should continue.
“We expect the Funding for Lending scheme to continue to encourage a downward drift in interest rates. This may prompt an increase in remortgage activity as borrowers seek to take advantage of lower rates.”
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