Northern Ireland sees significant increase in lending to home buyer
UK regions are seeing more first time buyers securing loans in a sign that the overall market is recovering in a sustainable way. For example, the number of loans to first time buyers in Northern Ireland increased by 36% in the second quarter of 2013 compared to the same period last year, data from the Council of Mortgage lenders shows.
This uptake resulted in the largest number of loans advanced to first time buyers in a single quarter since the end of 2009. The number of loans for house purchases advanced in Northern Ireland increased by 20% in the second quarter of 2013 compared to both quarter one and the second quarter last year. This represents the first year on year increase in house purchase lending in Northern Ireland since the start of 2012.
A total of 1,500 loans were advanced to first time buyers in the second quarter of 2013. The number was up 25% from the first quarter this year and up 36% compared to second quarter last year. Loans to first time buyers had a total value of £110 million which again represented an increase on the £90 million advanced in the first quarter and the £80 million in the second quarter of last year. First time buyers borrowed, on average, £71,000 this quarter compared to £66,250 last quarter. The amount borrowed by first time buyers relative to their income was virtually unchanged at 2.81 times their income compared to 2.79 times in the last quarter, but this still remains much lower than the UK average of 3.3.
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This parallels with the small uptick in the average loan to value ratio increasing to 81% in the second quarter compared to 80% the previous quarter, something seen in the UK overall. The majority of first time buyers in Northern Ireland, 73% compared to the 40% UK average, bought properties valued at less than £125,000, and therefore would have avoided paying any stamp duty. This proportion is considerably higher than the 7% of first time buyers in Northern Ireland who were exempt from stamp duty in 2007.
There has been a return to growth in home mover lending, with 1,000 loans advanced in the second quarter, up from 800 in the last quarter and up from 900 in quarter two of 2012. The total value of loans to home movers was £100 million in the second quarter, an increase from £90 million in the second quarter of last year and larger than the £80 million advanced in the first quarter of 2013. Despite the increase in lending, home movers in Northern Ireland still only accounted for 42% of the house purchase market in quarter two which is lower than the 55% UK average.
A total of 2,400 loans worth £210 million were advanced to borrowers for house purchases in Northern Ireland in the second quarter of 2013. This represented an increase of 20% compared to both the previous quarter and the second quarter of 2012. This is the first year on year increase since the start of 2012. Lending for remortgages picked up in the second quarter in Northern Ireland, with £110 million advanced to borrowers, up by 22% compared to the first quarter of the year. However, this was still 8% lower than the second quarter of 2012 and was not as strong as the UK as a whole which saw year on year increases in remortgage lending for the first time since the end of 2011.
‘The overall increase in lending is most welcome, and first time buyers seem to be a key driver in this growth,’ said Brian McCormick, chair of the CML in Northern Ireland. ‘House prices in Northern Ireland are starting to stabilise and in the second quarter we did not see a year on year fall which is a very positive sign, alongside lending increases, for the future,’ he added.