The number of first-time buyers is at its highest level since before the recession.

Almost 327,000 people took their first step on the property ladder last year – a fifth more than in 2013, a report found.

This is the highest number since 2007, despite soaring house prices in many parts of the UK.

Halifax, the country’s biggest mortgage lender, said that while the rest of the housing market cooled and mortgage approvals dipped, first-time buyers bucked the trend last year.

The Government’s Help to Buy Scheme – which allows people to buy homes with a smaller deposit – had boosted numbers, it said, while low interest rates also made repayments more affordable for young buyers.

The recent mortgage war between lenders, during which banks and building societies competed to offer the cheapest deals, had also helped more people to buy their first home.

Craig McKinlay, of Halifax, said: ‘First-time buyers are vital for a properly functioning housing market.

‘Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first-time buyers in the past two years.’

The average cost of a home bought by a first-time buyer rose 9 per cent to £172,000 compared to a year ago.

However, the cost of a deposit for this type of buyer fell 7 per cent over the same period to £29,000 as low interest rates made it possible to buy a home with a less savings and still afford the monthly bill.

House prices rocketed in the first half of the year, but fears of a housing bubble prompted the Bank of England to impose stricter limits during the second half.

This included new limit on the amount homeowners can borrow relative to their income.

The Financial Conduct Authority also asked lenders to carry out more thorough checks on borrowers’ spending habits to ensure they can afford repayments if interest rates rise.

But, despite these new rules, thousands of determined first-time buyers managed to buy a home last year.

The average age of a first time buyer was 30, up from 29 in 2011.

The region with the oldest average age of this type of buyer was London at 32.

Halifax said that, while the rest of the market cooled off, first-time buyers had continued to successfully obtain mortgages.

Mr McKinlay said the drop-off elsewhere in the market was because many existing homeowners had decided to delay re-mortgaging after economists predicted interest rates would not rise until at least late this year, meaning there was less urgency to switch. 

Source: Daily Mail

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