Only 29% of all lending for house purchase was to first-time buyers, compared to a long-run trend of more than 45%.
This suggests that first-time buyers’ confidence may be lower than other buyers, and that affordability constraints are likely to be affecting them to a greater extent.
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. On the basis of one month’s figures it is too soon to say whether this marks the start of a return to lower levels of lending growth, although the CML does expect to see growth moderating during the course of 2003.
Remortgaging remained extremely popular, accounting for 49% of total mortgage lending in February. And there is some evidence of increasing popularity for fixed-rate mortgages, which accounted for 39% of total lending in February. This is unsurprising in view of the very low level of interest rates at present.
Commenting on this month’s figures, 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.
“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.”
