First-time buyers on the up in Northern Ireland

Lending to first-time buyers increased in the final quarter of the year in Northern Ireland, contributing to the largest number of loans to first time buyers in a single year since 2007, according to new data released by the Council of Mortgage Lenders.

A total of 5,100 first-time buyers entered the market in 2012, up from 4,700 in 2011 – an increase of 9 per cent.

On a quarterly basis, lending to home movers fell in the fourth quarter compared to the previous quarter, while remortgage lending picked up slightly.

A total of 1,400 loans were advanced to first-time buyers in the fourth quarter in Northern Ireland, an increase of 8 per cent on the third quarter and the same as the last quarter of 2011.

First-time buyers in Northern Ireland typically borrowed 80 per cent of their property’s value, slightly lower than in the third quarter when first-time buyers typically borrowed 82 per cent of their property’s value, and on par with the rest of the UK.

Other measures of first time buyer affordability remain favourable compared to the UK as a whole. First-time buyers in Northern Ireland borrowed an average of 2.89 times their income; Mortgage payments typically consumed 19.1 per cent of their income, remaining lower than 20.1 per cent in the UK.

The vast majority (79 per cent) of first-time buyers in Northern Ireland continued to buy properties valued at less than £125,000.

While there was an increase in the number of first time buyers in 2012, a fall in the average amount borrowed led to a fall in the value of lending to first-time buyers in the year – £380 million down from £410 million in 2011.

Year-on-year, the number of loans advanced to home movers fell by 10 per cent in 2012 compared to 2011, 3,600 loans down from 4,000 in 2011, possibly due to the steeper house price falls in Northern Ireland than the rest of the UK.

In the year overall, the increase in lending to first-time buyers was offset by the fall in lending to home movers. In total, 8,600 loans (worth £780 million) were advanced for house purchase in 2012, down from 8,800 loans (£860 million) in 2011.

Derek Wilson, chair of the CML in Northern Ireland, commented: “The increase in first-time buyers across 2012 is encouraging but the fall in overall house purchase lending suggests that there are still challenges for the market in Northern Ireland.

“First-time buyers are still finding mortgage affordability more favourable than the UK overall, which we hope will have a flow on effect to the rest of the market in the near future.”