Building Societies Association: First-time buyer numbers up 50%

Building Societies Association (BSA) members have reported that loans to first-time buyers were up by 50% in the first five months of this year compared with the same period in 2012, with over 32,000 buyers getting their first mortgage

Amongst first time buyers with a deposit of 10% or less the difference between this year and last is even more marked with more than two and a half times the number of loans made, rising from 3,400 to 8,900.

More generally, data published by the Bank of England on lending to all types of borrower shows that building societies and other mutual lenders lent £3.6bn in mortgages in May, compared to £2.8bn in May 2012, a 28% increase.

This means that mutual lenders accounted for 24% of all mortgage lending across the UK in May. In the five months to May this year mutuals have lent £14.5bn a 24% share up from £11.4bn (20% share) in the same period last year.

On a net basis, after repayments on existing mortgages are taken into account, mutuals lent £1.2bn in May, up from £0.9bn in May last year. In the five months January to May net lending by mutuals was £4.0bn more than double the amount lent in the same period in 2012.

In contrast net lending across the rest of the market contracted by £3.4bn in the first five months of this year.

The mutual sector remains the only part of the mortgage market in the UK where mortgage balances are rising.

Paul Broadhead, head of mortgage policy at the BSA, said: "Building societies and other mutual lenders continue to play a dominant role in supporting members of the UK public looking to buy a new home.

“While total net mortgage lending across all other lenders dropped by £3.4bn in the five months to May, net mortgage lending by the mutual sector increased by £4.0bn.

"Supporting first time buyers is very much part of the sector's ethos and in the first five months this year the number of loans to this group jumped by 50% compared to last year.

“Importantly as deposits remain a clear barrier to home ownership, building societies and other mutuals have made over two and a half times as many loans to first time buyers with a deposit of 10% or less.”

Peter Lawrence at Lawrence Rand said: "Seeing greater number of first time buyers entering the market is good news as it helps "free up" movement across the entire marketplace and the greater the liquidity and choice, the better for everyone."