Conditions have improved for first-time buyers in the last 12 months, according to new figures from the Council of Mortgage Lenders (CML).
The number of mortgages advanced to new buyers in September reached 23,600, the CML said – a third higher than the same month in 2012.
Over the three month period between July and September, almost 75,000 mortgages were advanced to first-time buyers. This represents a similar rise of around a third on the same period last year.
The figures reflect a more inclusive market for first-time buyers, with cheaper mortgage rates and the recent extension of the Help to Buy scheme.
The scheme has proven popular among new buyers since its launch last month, supporting over 2,300 successful applications.
The CML figures also appear to reflect a rise in house prices over the last year, which may add to concerns that the government initiatives are driving demand too vigorously.
While the volume of first-time buyer mortgages in September rose by a third on last year, the value has risen by 50% to £3.3 billion.
Help to Buy: "Responsible" Lending
Prime Minister David Cameron defended the Help to Buy scheme earlier this week, noting that the vast majority of applications were made outside of London and the South East.
The lenders involved with the scheme, RBS, NatWest, and Halifax, have shown that the average loan size sought by Help to Buy applicants (£155,000) is relatively modest when compared to average prices nationwide (c. £250,000).
Though the scheme is designed as a short-term fix, there are signs that borrowers are considering the affordability of their mortgage in the medium term rather than exposing themselves to the risk of rate increases.
Jeremy Duncombe of the Legal & General Mortgage Club said there had been a revival in fixed-rate products over variable rate deals in 2013, with 86% of all home purchase mortgages and re-mortgages in August involving a fixed-rate deal.
The scheme is therefore being presented as supporting responsible lending rather than encouraging buyers to overextend themselves or to take undue risks. Buyers are also being reminded that Help to Buy deals work in the same way as standard 95% mortgages, and must be given the same considerations.
(Fixed rate vs. variable rate mortgages: See our guide.)
Reform Stamp Duty for First-Time Buyers
Though conditions appear to be improving, the CML believes that the government could still do more for first-time buyers by reforming stamp duty.
The Council said it was counterproductive to launch a scheme for first-time buyers whilst still subjecting them to the additional burden of stamp duty.
"There is a perversity in introducing policy initiatives that seek to bridge the deposit gap for households, while at the same time exposing the same group of buyers to a material tax burden," it said in its latest newsletter.
(How does stamp duty affect you? See our guide.)
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