First-Time Buyers Rise 28% Year-on-Year in November as Average Mortgage Rates Fall to Lowest in Three Years


The number of first-time buyers climbed 28% year-on-year in November thanks in part to the lowering of mortgage rates by lenders, according to the latest First Time Buyer Tracker from LSL Property Services.



Average Purchase Price (£)

Average LTV

November 2013




October 2013




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+0.2% (from 81.1%)

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+1.0% (from 80.3%)

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 +2.2% (from 79.1%)

There were 27,800 first-time buyer sales in November, 6,100 more than a year ago, showing improvements in the first-time buyer market are gathering even greater momentum.

The average first-time buyer LTV rose to 81.3%, the highest since September 2011, in a sign of the increased availability of mortgages as banks become more willing to lend to those with smaller deposits. As a result the average deposit size fell to £27,942, a 3.4% fall in the past three months, attracting more aspiring buyers back into the market.

Deposits consequently now represent a smaller proportion of first-time buyer incomes, with the average deposit of a new buyer equalling 76.6% of annual income, a 5.8% fall over the course of the last twelve months.

The increase in first-time buyer activity has also been fuelled by the improved affordability of mortgages. In November the average mortgage rate fell to 3.93%, down 0.8% since last year, with banks having being able to pass cheap credit from Funding for Lending onto borrowers.

But there are warning signs ahead, with rising house prices potentially threatening to price the next wave of first-time buyers out of the market. The average purchase price for a first-time buyer rose by 11.4% year-on-year in November, and now stands at £149,403 – up £15,340 in the last twelve months.

Similarly, although the cheaper rates meant that mortgages were more affordable for first-time buyers, the proportion of income represented by mortgage repayments is starting to creep up as house prices rise. Mortgage repayments have increased 0.1% in the past month and 0.4% over the past three months, despite consistently falling mortgage rates.

First-Time Buyer Affordability


Average deposit (£)

Deposit as proportion of income

Average mortgage rate

Mortgage repayment as proportion of income

November 2013





October 2013





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David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains, said: “There has been a revival in the first-time buyer market over the past twelve months, with sales increasing by nearly a third. Mortgages are much more affordable, which has opened the door to welcome in thousands of aspiring homeowners who had previously been locked out of the market. A boost in economic confidence has attracted more buyers back to bricks and mortar, while banks have equally been far more prepared to lend to those with smaller deposit sizes.

“Rates have fallen, and there is now an array of attractive deals on offer for shrewd first-time buyers, which has made mortgages far easier to secure. The spark has been government schemes like Funding for Lending and the equity loan first phase of the Help to Buy scheme. Although Funding for Lending has been cut back, the mortgage guarantee scheme, second phase of Help to Buy introduced in October, will really kick into gear in the next few months. It will be this that will carry the torch through into 2014.”

“However there is a flipside to the coin. Prices are rising and there is simply not enough housing stock to match continued demand, meaning this will continue well into 2014. If demand is not satisfied by supply, then sustainable growth will be hampered and future first-time buyers will once again be left out in the cold. We need far more homes, particularly at the lower end of the spectrum if we are to sustain a healthy property market.”

On a regional level, there continues to be disparity across the UK with stark differences throughout the country in property values, deposits required and mortgages taken out for those entering the property market. In the three months to November the South East saw the greatest number of first-time buyers, with 15,600 sales across the region, closely followed by London at 13,400. This is despite the fact that first-time buyer properties in the capital and the South East have required the largest average deposits, at £67,623 and £37,788 respectively.

By comparison, in the North West first-time buyers only require an average deposit of £15,791 with an average purchase price of £112,820. This therefore means that new buyers in these Northern regions only have to take out an average mortgage of £97,508, whereas by comparison those in London have an average mortgage of £208,448.

Wales in particular has experienced uplift in first time buyer activity, largely to a required average deposit of just £11,683 and purchase price of £107,038.

David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains, concludes: “Although a flag has been planted in the nationwide recovery, up and down the country we are seeing contrasting fortunes for first-time buyers eager to enter the property market. Price rises in the capital and South East are surging ahead of those in the rest of the country, and the resulting deposits needed to get onto the ladder are following suit. Buyers in the North are faring better in this respect. They have less of a mountain to climb to reach the summit of the required deposit.

“However, while potential homeowners in Northern region have smaller deposits to accrue, they are – as a whole – less cash-rich than those in the capital and the surrounding areas, which therefore necessitates them taking out higher LTV mortgages. With many anticipating a rise in interest rates next year, many new homeowners across the country will feel a greater pressure on their finances – especially with repayments as a proportion of income starting to creep up.

“It is startlingly evident that while the UK-wide latest phase of the Help to Buy scheme is having a positive effect, a more tailored and less of a ‘catch all’ approach is needed.  One that meets the varying needs of aspiring buyers across the regions. This will be crucial in alleviating the regional disparity and preventing the wall of obstacles that first time buyers have to scale from mounting further.”


LSL / Acadata Wales HPI News Release

Welsh house prices rise by £1,125 in October

  • Average house prices up £3,137 since start of 2013
  • Sales at highest level since December 2007
  • New record average price in Cardiff, up 7.4% annually

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Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “The housing market in Wales has turned over a new leaf and is clearly entering a new phase, with pent up demand and strong competition driving house price growth and rising sales. The market is powering ahead, with prices increasing by £1,125 compared to September, representing the third monthly price rise, while prices are up by £3,137 since January 2013. New buyer enquiries, sales and price expectations are all above the three-month average illustrating the strong headway being made.

 “Sales in particular are now standing at the highest level since December 2007, and momentum is building further – thanks to the boost in consumer confidence and the improving economic picture. Now that mortgage rates have dropped to record lows, aspiring homeowners are starting to have more chance to put together the money required for a deposit. As a result there are bursts of first time buyers pouring into the market with much more zeal, with Wales has seen a higher loan-to-value ratio than elsewhere in the UK. While there’s an improvement in the home movers sector of the market too.

“First-time buyer homes are proving particularly popular in Cardiff. Prices in the capital are up 7.4% on the year, setting a new record price, while many other parts of Wales remain more subdued. Without doubt, Cardiff is a different kettle of fish from London and South Wales is no South East of England, but as a whole the housing market in Wales is making strong strides forward nonetheless. Regionally however, some areas do differ more than others in terms of performance due to their local economies. Wage growth is still slow, and across Wales this will prevent prices from rising too quickly.

“What’s key is that we see steady, house price growth to ensure sustainable growth. When it launches on 2nd January, the Help to Buy Wales shared equity scheme will provide a new opportunity for first- time buyers and existing home owners on new-build properties. But as the scheme is geared up at new-build properties, which represent only a smaller proportion of total housing sales, we expect the scheme will not – by and large – drastically affect overall prices.

“However house-building in Wales is still below pre-recession levels and this supply remains an area that needs to be addressed in order to continue the positive growth. While, the UK Government’s decision to withdraw the Funding for Lending scheme indicates that the more recently announced Help to Buy schemes are offering significant support to the sector, more can be done. In the coming year much will be determined by the development of the jobs market in Wales.”

Welsh house prices rise for first time in seven months

  • Prices increased £1,563 in September
  • Average price now £1,219 higher than start of 2013

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Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “The economy is racing along and the rise in confidence, underpinned by better access to mortgages, is fuelling the property market in Wales. A shift in gear towards growth has become much more obvious: prices have moved into positive territory for the first time in seven months, with a rise of £1,563 in September compared to August.

“Hordes of first-time buyers are coming out of the wood work, providing renewed strength which will help the Welsh market gather momentum. Record low interest rates have meant mortgage payments for new borrowers are their most affordable for over a decade. As a result the mortgage market is bustling with potential buyers. Since the summer the increase in first-time buyers has helped unlock property chains higher up, allowing sales to soar. The slight drop in September is a reaction to the record high peak in August, reflecting a return to a more sustainable level on the barometer.

“The Government’s Help to Buy Cymru scheme has provided much needed support to people in search of affordable new build housing. It’s incredible to see that demand has leapt up and activity in Wales has become more even across all tiers of the property market. Prices have risen now that the distribution of sales is no longer primarily from the lower end of the market. However, there are concerns that interest rates may rise and a slowdown in wage growth could put pressure on aspiring buyers, eager to step on the ladder.

“On a smaller scale, the north and south divide is fading as the average price changes in north, south and central regions are almost identical in September reflecting the uniform recovery across the country. Cardiff is a hotspot having the largest total number of sales, and represents a substantial proportion of the Welsh property market. Often prosperous areas benefit from the upswing in buyer interest, as stronger local economies attract new buyers looking to settle down and find employment. Cardiff, boasts more green space per person than any other UK city, which is a key factor enticing more and more buyers into the region.

“With an influx of people into Wales, the market will hit a roadblock if the lack of housing supply in Wales is not addressed. The spotlight will be shone on the new Housing Bill to boost the supply of affordable homes. While the possibility of the Government’s New Buy mortgage guarantee scheme with builders and lenders will also provide a further foundation for growth.  These schemes will be crucial for the Welsh economy to stay on track and for the recovery to reach the finish line.”

Late Rent Lowest Since 2008

  • Levels of late rent healthiest since 2008 – tenant arrears drop by £50 million in October
  • Comes despite new high for rents across England and Wales – at £758 per month
  • Rents rise 0.2% in month since September, up 1.9% from a year ago
  • Demand for tenancies remains strong, up 7.4% since October 2012

Tenant arrears are at their lowest since 2008, despite a new record for rents across England and Wales, according to the latest Buy-to-Let Index from LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.

Average rents across England and Wales rose to £758 per month in October, after a monthly increase of 0.2% (or approximately £1) since September.

Annually, this leaves rents 1.9% higher than October 2012 – and at a new all-time high.

October also saw lettings activity accelerate on an annual basis. The number of new tenancies agreed across England and Wales increased by 7.4% compared to October 2012. This was despite a minor slowdown on a monthly basis, with 1.6% fewer new lettings than in September.

While as a whole rents across England and Wales rose on a monthly basis, seven out of ten regions saw rents fall between September and October.

The fastest monthly fall was in the West Midlands, with rents down 3.6% since September. This was followed by a fall of 2.4% in the East Midlands and a monthly drop in Yorkshire and the Humber of 1.7%.

However, the South East experienced rent rises of 2.4% between September and October, while rents in the South West rose 1.5%, and London saw rents rise on a monthly basis by 1.3%.

On an annual basis, London saw by far the sharpest rent rises – 4.9% higher than in October 2012. While this was followed by a 3.1% annual increase in the South East, Wales matched this figure, with Welsh rents also 3.1% higher than a year ago.

Meanwhile, rents in the East Midlands have fallen over the last year by 3.9% (or £30). This was followed by a 1.5% annual drop in the North East, while rents in the West Midlands are now 1.2% lower than in October 2012.

David Newnes, director of LSL Property Services, owners of estate agents Reeds Rains and Your Move, comments: “At a time when a seasonal slowdown would usually be expected rents are up again. The lettings market appears to be experiencing an extended Indian summer. Normally we can expect the rush of early autumn to fade into a late autumn hibernation. Even as the nights draw in, demand for homes to rent seems unabated, and still well ahead of a year ago. While buying a home is certainly getting easier, it’s the private rental market which is taking the strain for the majority of new households. With below inflation rises it is renting which is still relatively affordable in the face of struggling wage growth and rock bottom savings rates.”

Gross yields on a typical rental property remained steady at 5.3% in October, the same as in September. However, taking into account capital accumulation and void periods between tenants, total annual returns on an average rental property rose to 9.7% in October. This compares to 8.4% in September – with the increase due to accelerating house price rises. In absolute terms this represents an average return of £15,837, with rental income of £8,277 and capital gain of £7,560.

If rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 14.5% over the next 12 months, equivalent to £24,921 per property.

David Newnes comments: “Rents are still rising, but the pace of change is stabilising – a sure sign of health for the lettings market. Even before the latest wave of price rises, plain rental yields are stable and set to grow. Moreover, with tenant finances improving, those yields on paper will be more easily realised. Yet on top of rental income, surging capital accumulation is delivering another source of confidence. As prices rise, not only does the importance of a relatively affordable rental market increase, but the incentives for landlords to expand their portfolios are growing too.”

Tenant finances saw a rapid improvement in October, with the total amount of late rent across England and Wales falling by £49 million since September – to £245 million. As a proportion, this represents 7.1% of all rent, down from 8.5% in September. On an annual basis tenant arrears have also improved, with the total amount of late rent down by £28 million since October 2012, and also down as a proportion on an annual basis, from 8.1% of all rent in arrears in October 2012.

October’s measure of tenant arrears – at 7.1% of all rent – represents the healthiest month for tenant finances since LSL began recording this data in November 2008. During that month five years ago, 13.1% of all rent in the UK was in arrears.

David Newnes concludes: “Until we can boost homebuilding to the tune of an extra 200,000 a year, rents will keep rising on an annual basis. Yet annual rises are still below inflation. Without a doubt households don’t have cash to burn at the moment. So the fact tenants have paid down late rent to such an extent is testament to the professionalism of landlords, the availability of advice for tenants, and the stability of the entire industry.

“The first rung of the housing ladder is still a big step up. Despite a healthier circulation of mortgages, even a 5% deposit is fast becoming a challenge for many would-be first-time buyers. For the foreseeable future a healthy private rented sector will be as critical for the UK economy as it is for those besieged every month with other household bills.”

High LTV lending rises 80% year-on-year in October


House purchase lending increased for the eighth month in a row in October, reaching the highest level in nearly six years, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 68,996 house purchase loans in October, as approvals rose 3% from 66,735 in the previous month, pushing figures to a new post-financial-crisis record.  Compared to October last year, approvals were 32% higher, equal to 17,000 more approvals. Compared to in January 2013, approvals have risen 27%.

The sustained recovery in lending has been driven further forward by the increasing number of loans that are being approved to buyers with smaller deposits. In October, there were 9,176 loans to borrowers with a deposit of 15% or less of the total value of the property, an increase of 15% to September 2013, and an 80% increase year-on-year. This represents the highest number of high LTV loans since April 2008.

But despite the increase in high LTV lending, the number of affordable properties is decreasing as house prices are being pushed up by a supply some areas. There were just 13,799 loans on properties up to the value of £125,000 in October – typical first-time buyer stock – but this was 6% lower than in September.

Richard Sexton, director of e.surv chartered surveyors, explains: “The mortgage market is bustling with activity, as further buyers migrate back to the market. Winter may be approaching, but that’s not dampening the spirits of potential homeowners, who are moving house, or buying into property in their droves. The sense of economic positivity, arising from rising house prices, falling unemployment and increased lender confidence is catching on like the common cold, and more people are looking to move. It’s a merry-weather market, with positive sentiment to match the season.

“Help to Buy is needed more than ever, as rising house prices could push more borrowers into the high LTV bracket. House prices have risen 4.3% since last October, according to LSL, but that hasn’t been matched by savings rates, or wage growth. The size of a deposit needed to access the best rates has risen – and many borrowers are now forced to take out mortgages with just a small deposit saved. It’s had a huge effect on first-time buyers, who haven’t seen their equity share increased.

“That’s where Help to Buy comes in. It provides a shortcut for buyers who lack the cash for chunky deposits to be backed by banks, by bolstering their deposits, so that they can access better rates. And it encourages lenders to support high LTV borrowers too. They have become less of a risk, because of the mortgage guarantee scheme, and are now more viable investments.”

Compared to the beginning of the year, the outlook for the mortgage market is far rosier. Approvals slid 2% between December 2012 and January 2013, and a further 4% in the month to February. But Help to Buy and Funding for Lending have busted that trend by encouraging banks to slash rates and boost lending, and the beginning of 2014 should see lending reach a fresh high. Approvals still fall far short of pre-2008, when they were consistently over the 100,000 mark, but they are increasing at a far more sustainable rate.

Nationwide recovery

High LTV lending increased in every region of Great Britain in October, aside for Scotland and the North East and Cumbria. The increase in high LTV lending had a big impact in Yorkshire, where the number of high LTV approvals rose 18%, with high LTV borrowers accounting for 21% of the market. In London, LTV borrowers accounted for just 5% of the market, but the number of approvals was 21% higher than in September.

The North West remained the region with the greatest total number of high LTV borrowers in October, with 1,447 loans to borrowers with a deposit of 15% or less.

But more repossessions in the North

Recent research from e.surv reveals that although the mortgage market is speeding to recovery, there remain severe regional disparities. Court ordered repossessions fell 33% in the year to July 2013, but they fell far more quickly in the South, which has led to a widening North-South divide in repossessions. 72% of towns in the North had more repossessions than the UK average.

Richard Sexton, director of e.surv chartered surveyors, explains: “Up until now, the recovery of the mortgage market has been focused in London and the South East, where the economic climate is picking up the fastest. Repossessions are falling more quickly in the South, and the bulk of lending is still to buyers who can afford larger deposits, and access lower rates.

“But even London and the South East aren’t immune to the difficulties caused by rising house prices. Climbing house prices spell good news for home-owners, who see their equity in a house dramatically increase. But there’s a flipside for first-time buyers, who struggle to save for a deposit. The biggest missing piece in the mortgage market recovery – and the piece which would help to resolve this – is house-building. Without greater construction, the imbalance between the supply of new houses and demand of new buyers will become all the more dramatic, competition for houses will drive prices further up, and more new buyers will be tipped out of the market.”



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Paper Summary 31st October 2013


  • In the Daily Mail, Linda Whitney reports candidates are still having to work hard at making their applications stand out – although Adzuna has some good news, saying fewer than two people are now chasing every job.  Mark Bull, chief executive of recruiter Randstad UK says, “Match your skills and experience to the vacancy but also understand what it offers that will fulfil you and ensure this comes through in your application and interview.”  He also advises candidates to demonstrate they are high-fliers who should be considered above others.  He says, “Highlight your extracurricular activities and the skills they have given you – employers look for rounded individuals”


  • The Daily Telegraph reports elderly people will have to spend nearly twice as much on care bills as previously thought before qualifying for state help.  The Coalition’s pledge to overhaul care by introducing a £72,000 cap on care costs is misleading because it excludes tens of thousands of pounds in accommodation fees according to care agency Prestige Nursing+CareNorman Lamb, the care minister, said the Government had always made clear that the cap would not apply to accommodation costs, which residents would continue to pay even after they qualify for state support.


  • Elsewhere in The Daily Telegraph, personal finance reporter Kyle Caldwell looks at how to make a deposit for a first house stretch further.  His advice includes investing in residential property funds and cutting back on discretionary spending including moving back in with friends or parents.  As average London rents hit £1,100 a month according to LSL Property Services, “would-be buyers are ploughing much of their hard-earned cash into landlord’s pockets”

Paper Summary: 14th October 2013


  • The front page of the Financial Times is given over to Help to Buy.  Lloyds, one of Britain’s big four banks, has warned that the government’s scheme risks creating a dangerous bubble in property prices unless steps are taken to free up planning restrictions and boost the supply of housing.  António Horta-Osório, one of the most enthusiastic supporters of the government’s initiative said the policy could only succeed if it led to broader reform.



  • Metro runs a piece on research from LSL Property Services about the cost of stamp duty – the average price that a first time buyer pays is now £1,457.  At the other end of the spectrum, the i paper, shows that almost 7,400 homes around Great Britain changed hands for more than £1m last year, a 2% increase on 2011.  Those figures, however, only cover property that was sold during 2012 – a small number of houses worth over £1m.  Zoopla puts the total figure at around 323,77 and of those, almost a quarter – or about 78,999 – have moved to valuations above £1m over the past 12 months.


  • Both the leader pieces in The Sun and the Daily Express look at green taxes and subsidies that form a substantial and growing component of domestic energy bills (adding £132 to our power bills according to an editorial in the Daily Mail).   While The Sun focuses on a case study, The Express says David Cameron could not only help millions of hard-pressed families but also remind them that many of these measures came in when Ed Miliband was climate change secretary in the last Labour administration – “to fail to adjust to the new straitened circumstances that have prevailed since the 2008 crash is not just bad politics but cruel politics as well. Many people are on the verge of having to choose between heating and eating.”



  • The Financial Times reports that London achieved the fastest rise on business activity last month, a survey of 1200 employers found for the Lloyds Banking Commercial regional purchasing managers’ index.