Boost for first-time buyers and NewBuy
Tuesday, 17 April 2012 8:17 AM
Lending to first-time buyers increased in February but their mortgage costs also rose, according to new figures.
The Council of Mortgage Lenders (CML) said banks made 14,100 loans to people taking their first step on the property ladder in February, an increase of eight per cent on January and 16 per cent on a year ago.
This reflected the run-up to the end of the stamp duty holiday in March, with 51 per cent of first-time buyers buying in the £125,000 to £250,000 bracket that was covered by the temporary concession.
Successful buyers were spending 12.5 per cent of their income on mortgage interest payments. That was up from 12.1 per cent in January and is the first increase seen since April 2011 thanks to a rise in some borrowing rates. The figure still compares well with the 19.6 per cent of income spent on mortgage interest payments in 2008.
CML director-general Paul Smee said the improvement in lending was encouraging. He went on: "It is not yet clear whether the end of the stamp duty concession will lead to a falling off in first-time buyer numbers and how much this may be offset by the government's NewBuy scheme, available to all buying a new build property."
However, there was encouraging news for NewBuy on Monday when the Halifax became the fourth lender to offer a range of mortgages linked to the scheme.
Two deals are available for borrowers with a deposit of between five and 10 per cent purchasing a new-build property from selected housebuilders: a two-year fix at 5.99 per cent with a £999 fee; and a two-year fix at 6.39 per cent with no product fee. Both loans also have a £265 mortgage account fee payable.
The Halifax also announced the launched of a multi-user cell for the scheme, which means that smaller builders will be able to participate.
Stephen Noakes, mortgage director, Halifax said: "As the leading lender in the new-build market, we're proud to supporting the NewBuy scheme. NewBuy will put the purchase of a new-build home back within the grasp of both first time buyers and homemovers, and will give a much needed boost to housing supply."
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