The housing market has been awaiting the return of the first time buyer.  Only with a real boost from first time buyers will the housing market be able to begin real recovery.  There have been short boosts in the last few years but none have sustained and grown over time.  Instead there have been sporadic increases that then decline with first time buyers becoming once again a rarity.

In January, thanks to the Funding for Lending scheme, first time buyers showed an increase in demand for purchase mortgages.  The scheme has assisted lenders in offering historically low interest rates with better deposit levels that have made mortgage lending more attractive and cheap to borrowers.  Mortgage lending in January reached a five year high according to the Council of Mortgage Lenders (CML).  The increase was attributed to a higher demand from first time buyers.

The lending level marked the best start to a year since January 2008.  There were 38,300 mortgages advanced.  Of the total, 15,900 were to first time buyers.  It marked a 24% increase compared to the same month last year.  First time buyers accounted for 42% of all mortgages.

Ashley Brown, director of independent mortgage broker Moneysprite, said, “Despite early doubts about the effectiveness of the Funding for Lending Scheme, it's now the main reason why lenders are offering more competitively priced products, and most crucially at the first time buyer end of the market.

“Without the first time buyer, the market cannot improve.

“It's vital that funds from the Funding for Lending Scheme don't dry up. If they do, lenders will once again head for the safe haven of higher deposit borrowers and we'll be back to square one.”