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Big rise in first-time buyers

Big rise in first-time buyers

The number of first-time buyers grew by around one-fifth in 2013, marking the strongest annual increase in more than a decade.

There were around 265,000 first-time buyers in the UK in 2013, showing the highest annual total since 2007 and lifting by 22% from an estimated 218,000 in 2012, according to Halifax, which used a combination of Council of Mortgage Lenders’ figures and its own to make its findings.

Halifax said the 22% increase is the strongest annual rise seen since 2001.

The rise also meant that first-time buyers increased their share of all house purchases made with a mortgage, now accounting for 44%, up from 40% in 2012.

Its figures also showed how ultra-low interest rates have helped to improve mortgage affordability in recent years.

The proportion of disposable earnings devoted to mortgage payments by a first-time buyer stood at 30% in the last three months of 2013, compared with a peak of 50% in the summer of 2007.

Halifax also found that 32% of local authority districts in the UK have house prices that are affordable to a first-time buyer on average earnings.

House prices are deemed to be affordable if they cost up to four times earnings.

But this is a significant improvement compared with the peak of the market in 2007, when just 5% of districts were found to be affordable.

In Scotland, 46% of local authority districts were found to be affordable and in Wales, 75% of districts were affordable.

A string of Government schemes have given those aspiring to get on the property ladder a helping hand over the last year.

In October the Government launched a new phase of its Help to Buy scheme, which offers state-backed mortgages to people with deposits of just 5%.

But critics of the scheme have argued that a lack of supply of homes for sale amid rising demand from buyers has put an upward pressure on house prices.

Fears have also been raised about what will happen to borrowers when interest rates start to rise again and their mortgage payments go up.

Martin Ellis, a housing economist at Halifax, said: “Low interest rates, improvements in consumer confidence and Government schemes, such as Help to Buy, all appear to have contributed to the rise in the number of first-time buyers.”