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FCA data shows first-time buyer recovery following 2008 slump

A decade of FCA mortgage data has revealed a healthy recovery for the first-time buyer market after a slump following 2008.

The class has shown steady growth from 2011 onwards and is now the healthiest of all lending categories by this metric, according to an FCA data bulletin.

In 2016 the number of new loans (312,500) was 69 per cent up from 2008 (184,500) and just 7 per cent below the level seen in 2007 (335,800). 

The total value of first time buyer ending also increased notably from 2011 onwards and in 2016 (£50.5bn) was over 10 per cent higher than in 2007 (£45.3bn).  

However, the most common mortgage term for first-time buyers is now 35 years. 

The FCA data report found there has been a “significant” lengthening of mortgage loan term over the past decade across all residential loans. 

It says mortgages with a term longer than 25 years accounted for 17 per cent of all loans in 2007. 

By 2016 this had increased to 39 per cent, of which around half were more than 30 years in length.  

The regulator says sales of interest-only loans decreased significantly since 2007. 

Under the FCA’s responsible lending rules, lenders are allowed to make interest-only loans, but only where there is a credible strategy for repaying the capital.  

In 2007, 32 per cent of new loans were interest-only. This has seen a steady decline to just 4 per cent in 2016.  

Fixed rate mortgages have increased in popularity over the period. 

In 2016 these accounted for 89 per cent of new loans, compared to 73 per cent in 2007.  

This trend has continued into the first half of 2017, with 92 per cent of mortgages being fixed rate. 

The last decade has also seen the steep decline in new sales of SVR and discounted variable rate loans.  

However, there is a much higher proportion of existing mortgage balances on variable rates.  

As at the end of 2016, 42 per cent of outstanding balances were on variable rates, although the trend is downward.  

 

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