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First-time homebuyers rush to join bargain hunt
16 May 2009
The number of first-time buyers climbing on to the property ladder rose by more than a third in March as bargain hunters returned to the market, figures show.
Some 12,500 first-time buyers were granted a mortgage during the month, up 36 per cent from February, in a further sign that the slump in the housing market is slowing. However, this was 30 per cent lower than the number of loans granted in March last year.
The total number of mortgages taken out by people buying a new home jumped by 29 per cent compared with February but was down 33 per cent from a year ago, figures from the Council of Mortgage Lenders show.
Sales remain low, with the average estate agency branch selling fewer than four properties a month. The CML said that demands by lenders for high deposits were deterring many potential buyers. Bob Panell, the head of research for the CML, said: “For those without substantial deposits, entering the market is still both difficult and uncertain. While there are some signs of demand increasing, house prices remain weak and lending criteria inevitably remain inherently conservative as lenders necessarily seek to rebuild their capital position.”
Abbey, the UK's second-largest lender, will on Friday relax the criteria for its most competitive loans, but buyers will need a 30 per cent deposit to get the bank's best fixed-rate deals.
Those who make it on to the ladder will find that less of their income is being taken up by mortgage interest than at any time since June 2004. The CML said that low house prices combined with low interest rates meant that the average first-time buyer will spend only 15.1 per cent of their income on mortgage interest payments.
Howard Archer, the chief UK and European economist at IHS Global Insight, said that very poor economic fundamentals and tight credit conditions suggest a relatively gradual pick-up in activity and he expected house prices to fall by a further 15 per cent.
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