Building Society Association members have reported that loans to first time buyers in the UK went 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 £3.6 billion in mortgages in May, compared to £2.8 billion 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 £14.5 billion, a 24 % share, up from £11.4 billion and a 20% share in the same period last year.
On a net basis, after repayments on existing mortgages are taken into account, mutuals lent £1.2 billion in May, up from £0.9 billion in May last year. In the five months January to May, net lending by mutuals was £4.0 billion, more than double the amount lent over the same period in 2012. In contrast, net lending across the rest of the market contracted by £3.4 billion 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.
Quote from PropertyCommunity.com : “UK house price growth continued to gain momentum last month, rising by 0.3% compared with the previous month and taking annual price growth to 1.9%. It means that the typical price of a home is now £168,941, according to the latest index from the Nationwide Building Society.”
Savings balances held with building societies and other mutuals rose by £1.1 billion in May, compared to an increase of just £0.2 billion in May last year. In the five months January to May, the amount of savings held has increased by £3.7 billion. This is in sharp contrast to the same period last year when deposits fell by £1.1 billion. ‘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 £3.4 billion in the five months to May, net mortgage lending by the mutual sector increased by £4 billion,’ said Paul Broadhead, head of mortgage policy at the BSA.
‘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,’ he explained.
‘On the savings side, the strong inflows suggest that mutuals are offering attractive products despite the challenges for providers and savers alike in relation to generally low interest rates across the market. For consumers the ongoing tough economic conditions faced by many households remain difficult,’ he added.