By Daniel Hunter
The number of first-time buyers increased by 3% in February, marking the best start to a year since 2008, according to new data released by the Council of Mortgage Lenders (CML).
Activity in the first-time buyer sector was 17% stronger in February than in February last year, and combined with January reached the largest number of first-time buyers in the first two months of the year since 2008.
Lending to home movers fell - contributing to an overall dip in house purchase lending - while remortgage lending also eased.
A total of 16,400 loans were advanced to first-time buyers in February, up on 15,900 in January and 14,000 at the same time last year. By value, loans to first-time buyers totalled £2 billion, the same amount as the previous month, but 18% higher than in February 2012 (1.7 billion).
First-time buyers accounted for 43% of all house purchase loans in February. This was the sixth consecutive month that this indicator has been at or above 40%, suggesting that market conditions continue to improve for first-time buyers.
Indicators of loan affordability also suggest that the market was marginally more favourable for first-time buyers in February. First-time buyers typically borrowed a smaller amount in February than in January, both in absolute terms and relative to their income. First-time buyers typically borrowed 3.19 times their income in February, down from 3.2 times in January, while the average loan to value ratio remained at 80%.
This is likely to be associated with a shift towards the purchase of less expensive properties by first-time buyers, with a small increase in the proportion of properties bought for less than £125,000.
Lending to home movers fell in February for the third consecutive month. A total of 21,500 loans were advanced to borrowers who moved in February, down by 4% compared to January and a fall of 3% on February last year. By value, home movers were advanced 3.5 billion in February, a 5% fall compared to January.
"First-time buyers are continuing to take advantage of more favourable market conditions, helping to drive the underlying trend for resilient house purchase lending," CML director general Paul Smee said.
"We hope that the new initiatives announced by the government in the 2013 Budget will further stimulate first-time buyer activity but also help those 'second steppers' looking to move into a new or existing home."
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