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First-time buyer numbers pick up, lenders says

Estate agent's window
Image caption Overall there is little chance of the property market picking up this year

The number of mortgages agreed for first-time house buyers picked up at the end of 2011, the Council of Mortgage Lenders (CML) said.

There were 18,700 home loans for first-time buyers in December, which was a 7% rise from November and 14% up on December 2010.

The CML said first-timers might be trying to buy before the end of their 1% stamp duty holiday in March.

The number of mortgages for all home buyers fell 6% in 2011 to 509,500.

"We have been expecting a flow of first-time buyers on to the market, as the stamp duty exemption ends in March, and December's figures appear to show this has now begun," said Paul Smee, the CML's director general.

"With the eurozone problems still rumbling on, however, we believe there is still a real risk that this year's lending levels will be lower than those seen in 2011."

The 1% stamp duty rate for first-time buyers, on properties worth between £125,000 and £250,000, is being reintroduced on 24 March.

The Chancellor George Osborne took the decision in last November's Autumn Statement, pointing out that the policy - introduced in March 2010 by the previous Labour government - had not helped many more people buy a home.

Rationing continues

The UK property market was very subdued last year, with completed sales falling by 1% to 869,000, their second-lowest since modern records began in 1978.

Lenders have been predicting for some time that lending to home buyers may fall even further this year, as mortgage rationing continues, accompanied by rising unemployment and a possible double-dip recession.

Although loans to first-time buyers may experience a brief rise in the run up to the 1% stamp duty band being reintroduced next month, loans to home movers are showing no such increase.

David Whittaker, of mortgage brokers Mortgages For Business, said: "There is a very real danger that the end of the first-time buyer stamp duty holiday will mark the beginning of a new slump at the bottom of the housing market as a rush to complete transactions before the deadline is followed by an activity vacuum."

Despite December's modest pick-up in first-time buyer mortgage agreements, there is little evidence that this amounts to any "rush" to beat the reintroduction of the 1% stamp duty rate.

The number of home loans agreed for first-timers in December was only 1,200 more than on November and was exactly the same as in July last year, just four months earlier.

First-timers are still having to put down, on average, a deposit worth 20% of the price of the homes they are buying.

Meanwhile in December, the number of loans to home movers fell by 2% from November, although at 28,700 they were still 3% up from December 2010.

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