FIRST-TIME BUYER NUMBERS UP 15% IN APRIL

-              Number of first-time buyer transactions rises to 22,000 in April, up 2,900 from March, as FLS allows lenders to offer more high LTV loans

-              Record low rates and a wider choice of mortgages translating into more FTB loans

-              9,600 more first-time buyers secure mortgages in first four months of year than in 2012 – strongest sign yet that the mortgage market is recovering

First-time buyer numbers rose 15% in April, as more first-timers were able to access record low rates and a wider choice of mortgages, according to the latest First Time Buyer Monitor from LSL Property Services.

There were 22,000 first-time buyer transactions in April, almost 3,000 more than in March, when there were just 19,100 transactions. And the average mortgage rate remained low, only rising slightly to 4.31% in April from a record low of 4.29% in March. Annually, the average mortgage rate was 0.35% lower than in April 2012, with falling headline rates helping to attract more first-time buyers.

Buyers with smaller deposits began to reap the benefits from Funding for Lending in early 2013. The scheme has allowed lenders to offer more mortgages to high LTV borrowers. The average LTV in April 2013 rose to 80.4% from 79.9% in April 2012, reflecting greater lending to high LTV borrowers compared to last year.

However, the falling affordability of deposits kept a lid on bubbling growth in the market – and partially offset the improvements in first-time buyer mortgage availability – preventing a greater increase in transactions. The average deposit rose 3% to £27,178 in April, despite lower rates and a rise in the average LTV, because of rising house prices.

Rising house prices also affected affordability for first-time buyers and were the primary cause for the hike in deposits. The average price of property purchased by first-time buyers rose 2.0% in April, to a high of £138,632.

Annually, the increase in property price is even more apparent – prices are now 12.1% greater than in April 2012. This has had significant impact on deposit sizes. Compared with last year, deposits now represent a 4.2% greater proportion of a first-time buyer’s wage. And as rising house prices drove a rise in the average deposit, mortgage repayments also rose as a proportion of a first-time buyer’s income.