Fewer first-time buyers than ever before
21 March 2003
The proportion of first-time buyers looking for mortgages fell below 30 per cent for the first time ever in February 2003, according to the Council of Mortgage Lenders.
The CML says that this suggests first-time buyers' confidence may be at a lower ebb than other buyers and that problems of affordability are compounding the problem.
With house prices skyrocketing across the south east of the country many first-time buyers are finding themselves priced out of the market.
Commenting on this month's figures from the Survey of Mortgage Lenders, CML Director General Michael Coogan said, 'Whether or not this month's figures mark the turning point to a less frenetic market, it is clear that first-time buyer activity is low relative to the overall size of the market.'
'This may well be because first-time buyers' confidence is more fragile than other buyers, as they do not have the benefit of a cushion of accumulated equity to act as reassurance at a time when the future of the market is unclear.'
Total gross mortgage lending also eased back from £19.4 billion in January to £17.8 billion in February, but remained significantly higher than last February's figure of £13.3 billion, the CML revealed.
The council stresses that it is too early to say whether we are seeing a return to lower levels of consumer borrowing but it does predict growth moderating during 2003.
A whopping 49 per cent of total mortgage lending in February was for remortgaging, while fixed rate mortgages came in at 39 per cent of lending, showing they are becoming an increasingly popular choice due largely to the current low levels of inflation.
Mr Coogan explained, 'While worries about war are bound to impact on short-term consumer confidence, it is difficult to factor in their potential long-term impact on the housing market. However, for many reasons it continues to seem very likely that the market will return to a period of lower and more sustainable growth during the course of this year.'