First-time buyers typically put down a 25% deposit in February.

First-time buyers increased by 7% in February according to the Council of Mortgage Lenders (CML), but typically put down a deposit of 25% – a new record.

Reporting new data today (14 April 2009), the CML revealed that there were 24,300 house purchase loans worth £3.1 billion during the month, compared with 23,400 loans worth £3.1 billion in January – a 4% increase.

There were 9,400 loans to first-time buyers – a 7% monthly increase – but significantly less than the 17,400 in February 2008.

They typically borrowed 2.95 times their income, down from three times in January. The average first-time buyer loan was £95,000, down from £97,000 in January and £114,000 in February last year. This decline reflects the change in house prices over the same period and the growth in the size of first-time buyer deposits.

However, lower income multiples and mortgage rates have made affordability considerably easier for those able to get a mortgage. Interest payments consumed 15.4% of the average first-time buyer’s income in February, down from 20.1% in February 2008 and the lowest proportion since June 2004.

There was also a shift away from tracker products towards fixed rates, with 56% of new loans at fixed-rate, up from 49% in January, while 31% were tracker products, down from 38% in January.

Michael Coogan, CML Director General, said: “These figures represent February mortgage completions. Recent mortgage approvals figures published by the Bank of England show some signs of improvement at the beginning of the borrowing process, although activity is at a very low level historically. We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year.”

Looking at historical levels, general lending is considerably weak at the current time, running at around one-third of the average February total of 76,000 loans for house purchases between 2002 and 2007.

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