Mortgage lending rose to its highest level in six years in 2014 as first-time buyers returned to the housing market, figures from banks and building societies showed on Thursday.
However, the number of new buyers is still much lower than before the credit crunch, and the data came as separate official analysis showed how far the number of young homeowners has collapsed over the past decade.
Despite a slowdown in sales in the final three months of the year and fears tighter rules on lending introduced in April would slow the market, an estimated £205.6bn was lent during the year, the bulk of it for house purchases, the Council of Mortgage Lenders (CML) said.
It was an increase of 17% on 2013’s figure of £176bn and the highest level of lending since 2008. The increase was driven by strong lending in the spring and summer as confidence returned to the housing market, driving up activity and prices in many parts of the country, and lenders became more willing to offer loans to borrowers with small deposits.
The CML’s chief economist, Bob Pannell, said the number of first-time buyers had increased in 2014, but remained below the high seen in 2007. “First-time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first-time buyers topped 300,000,” he said. “While a far cry from the half-million that we might regard as ‘normal’, this was the highest number of first-time buyers since 2007.”
Analysis by the Office for National Statistics, also published on Thursday, showed how young people have dropped out of home ownership over the period since 1980. The report revealed that as recently as 1991, around 65% of 25-to-34-year-olds in England had bought their own home, but by 2012 – the latest figures available – the percentage had declined to less than 45%.
Among 35-to-44-year-olds, the proportion of owners was also down sharply, from almost 80% to around 65%. The report showed that through the 1980s and into the 1990s one in three 16-to-24-year-olds could afford to buy their own home, compared with one in 10 today.
The ONS said the number of UK first-time buyers peaked nearly three decades ago in 1986, when more than 600,000 young people climbed on to the property ladder.
