Belfast Telegraph

Mortgages for first-time buyers rise by 29% in June

By Philip Whiterow

Mortgage advances picked up in June but remain well below the levels seen this time last year, new figures showed.

The total number of house purchase loans rose by 46,700, or 22%, over May, but were still 11% below June last year and 13% lower on a value basis, said the Council of Mortgage Lenders (CML).

First-time buyer activity picked up over the previous month with 18,100 loans to new entrants, up 24% on May, but 8% lower than last year on a volume and value basis.

Estate agents have complained that problems getting a mortgage, especially for first-time buyers at the bottom end of the market, are putting a brake on the market, but on a month-by-month basis the total lent to first-time buyers rose by 29% to £2.2bn in June.

The average loan to value for first-time buyers stayed at 80%, while the average income multiple increased to 3.22 from 3.18 a month earlier.

Remortgaging was unchanged in June from May, totalling 30,700 loans worth £3.8bn.

CML director general Paul Smee said: "Whilst there are clearly financial uncertainties ahead, it is encouraging to see more house buyers surfacing at the start of summer.

"Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while."

Over the second quarter to June, loans for all house purchases rose to 122,000 worth £17.6bn, from 97,200 in the first three months, but this was down from 138,300 and £20bn in 2010's second quarter.

Howard Archer, chief European economist at IHS Global Insight, said June is normally a strong month for housing market activity.

He said its view remained that prices would fall a further 5% by the middle of next year.

CML research earlier in the weak said 827,000 homes were in negative equity in the first quarter of 2011, with the value of their homes dropping to less than their oustanding mortgage.

Homes in regions including Northern Ireland - where values have dropped by up to 50% - were more likely to be in the red, CML said.

The latest University of Ulster house price survey puts the average house price at £137,814, compared to £240, 408 during the boom four years ago.