Big rise in first time home buyers

There were 68,200 first-home purchases in the second quarter of the year, with the 25,300 loans made during June, representing a 30% jump on the same month a year earlier, the Council of Mortgage Lenders (CML) said.

First-time buyers have also increased the amount they have borrowed, with an average loan size of £117,000 in June, up from £112,500 in May. The total value of loans advanced to first-timers in the month reached £3.5 billion, an increase of 40% on June last year as house prices have also risen.

Across the wider mortgage market, the CML said recent falls in interest rates had contributed to a record take-up of fixed rate deals in June.

Such products accounted for 86% of all mortgages, the highest level of fixed rate mortgage uptake at any point for at least 20 years.

The latest figures provide more evidence that schemes such as Help to Buy and Funding for Lending are boosting conditions in the housing market.

Interest rates continued to show a downward movement with fixed rates falling to 3.40% on average, well below the 4.25% recent peak last August.

Given concerns about the ability of home buyers to cope when interest rates eventually rise, CML director general Paul Smee said it was reassuring to see so many borrowers choosing to fix their payments.

He added: “First time buyers have become a strong driver in the growth of mortgage lending this year, proving that market conditions are favourable for them.”

The CML said a total of 151,600 loans was advanced for house purchase in the second quarter, up by 30% on the first quarter and by 17% compared with a year earlier. In June, £8.5 billion of loans were advanced, up 16% on 2012.