The new age of aspiration proclaimed by Grant Shapps last week has got off to a bit of a shaky start. New figures out today from the Council of Mortgage Lenders (CML) show that first-time buyers accounted for the lowest proportion of home loans since the start of the credit crunch in September 2007.
Lending for first-time buyers had been going through a slow recovery thanks to the availability of more mortgages that do not require a hefty deposit but the 35% share in April was down from 39% in March. The number of first-time buyer loans was down 17% on March, though up 8% on April 2009. The post-Easter period often sees a slowdown in lending and these are only the figures for one month but there are worrying indications that lending is not about to return to pre-crash levels any time soon.
Coming out of the last housing market crash and recession, first-time buyers accounted for more than half of loans as they took advantage of falling house prices. Between 1997 and 2002, the number of first-time buyer loans was running at more than 500,000 a year. However, a rising market over the next five years priced thousands out of a first-time home and between 2003 and 2007 the annual average fell to 370,000.
First-time buyer loans then halved in the wake of the credit crunch - to 194,000 in 2008 and 199,000 in 2009. For an age of aspiration to dawn, those figures have to improve significantly. However, while loans in the first four months of 2010 are up on last year they are actually down on early 2008.
CML director general Michael Coogan said the figures could have been affected by alterations to stamp duty and by economic and political uncertainty and that the general outlook for 2010 was ‘modestly positive’. ‘But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income.’
Even if those risks do not emerge, first-time buyers are still facing an uphill struggle to get on the housing ladder. Lending remains constrained and prices remain out of their reach thanks to the recovery sparked by record low interest rates (see today’s report from Shelter Scotland for more on that).
That has major implications for the government’s aspirations on home ownership. As Grant Shapps admitted in his speech last week, it’s quite possible that ownership will continue to fall in the short to medium term. The best hope for frustrated first-time buyers is another fall in house prices - but it would take a brave housing minister to greet that as good news.
Have your say
You must sign in to make a comment