Lending to first time buyers reached a record high of £53.2bn last year, according to a new report issued by the Council of Mortgage Lenders (CML). This is also the highest amount for first time buyer mortgage lending since 1974, which is when CML records began.
However, although the total value of the amount loaned to first time buyers has increased rapidly, the number of first time buyer mortgages has increased at a more modest rate. The total loaned to this group during 2016 had increased by 13% in comparison to 2015’s figures, while the actual number of mortgages has increased by 8%.
Re-mortgaging also experienced a rapid increase of 20% during 2016, while the number of re-mortgages given to homeowners who moved up or down the property ladder, actually fell by 2%.
Experts believe that the higher lending to first time buyers may have been triggered by low interest rate deals, some at the lowest rate ever. According to CML data in December, homeowners needed 17.4% of their income to pay off their mortgage, the lowest it has been.
There are also more government schemes available to help first time buyers raise a deposit to buy their own home. The current shortage of properties may be the reason why fewer existing homeowners moved to a new property during the year.
Mortgage advisers undertake comprehensive studying on CeMAP courses to ensure that they gain the knowledge which is required to advise potential buyers of their best options to secure an affordable mortgage.
