Mortgages for first-time buyers show a 36% rise
Northern Ireland's first-time buyers have benefited most from a significant increase in mortgage lending, new data has revealed.
The Council of Mortgage Lenders (CML) has shown a 36% hike in the number of loans going to people on the first rung of the property ladder in the second quarter of 2013 – compared to the same period last year.
Its research also indicated that 2,400 loans worth £210m were advanced to borrowers in Northern Ireland, representing a rise of 20% on the previous quarter.
The news reinforces signs that the local housing market is picking up and it follows a positive report from the NI Residential Property Price Index (RPPI) that indicated a 2% price hike across all house types between the first and second quarter of 2013.
That represents the first time the value of all dwellings – detached, semi-detached, terrace and apartments – have risen since 2007, yet prices are still 3% lower than this time last year.
Brian McCormick of CML in Northern Ireland said the overall increase in lending was a welcome development.
"House prices in Northern Ireland are starting to stabilise and in the second quarter we did not see a year-on-year fall, which is a very positive sign for the future, alongside lending increases," said Mr McCormick.
On average, first-time buyers in Northern Ireland borrowed £71,000 this quarter compared to £66,250 last quarter. The amount they borrowed relative to their income was 2.81 times – but this remains much lower than the UK average of 3.
The majority (73%) of first-time buyers across the province bought properties valued at less than £125,000 compared to a 40% UK average.
Figures from the CML also showed a return to growth in the home movers sector.
It said 1,000 loans worth £100m were advanced in the second quarter – up from 800 valued at £80m in the first quarter of 2013.
But home movers in Northern Ireland only accounted for 42% of the house purchase market, lower than the 55% UK average.
House purchase lending increased for the first time since the start of 2012, with a total of 2,400 loans advanced. Second quarter lending, worth £210m, represented a hike of 20% compared to both the previous quarter and the second quarter of 2012.
The statistics released by the CML yesterday support last week's RPPI report that the local housing market has stabilised.
Economist John Simpson said that property prices have normalised after hitting unprecedented levels.
"We've lived through a four or five-year period when collectively we engaged in housing madness, but we have now come back to normal," he said.
Key results from a recent NISRA survey of all house prices in Northern Ireland based on stamp duty and land tax showed:
e Between quarter one (January to March) this year and quarter two (April to June) residential property prices increased by 2%.
e Prices increased over the quarter across all property types, the first quarter since April to June 2007 that this has happened.
e Because of falls between July last year and March this year, prices fell over the year by 3%.
e Prices today are under half their peak value – a 53% fall.