80% of First-Time UK Buyers Had Help

The Council of Mortgage Lenders (CML), a UK industry group, this week said the tightening of lending criteria in the United Kingdom seems to be abating as the volume of first-time home owners receiving financial assistance grows.

The number of loans for home purchases edged up 4% from April to 37,400 mortgages in May worth £4.7bn (US$7.6bn).

At the same time, the volume of first-time homebuyers in the UK were little changed with 14,000 loans closed in May for a total £1.5, from 13,700 in April also worth £1.5.

The average first-time home buyer down payment holds steady in May after reaching a record 25% high in February. It may be a significant deposit, but the CML notes a rising volume of first-time home buyers receive financial help with their down payments. Newly updated CML analysis suggests that around 80% of first-time buyers aged under 30 are likely to be receiving help from parents as they are unlikely to have been able to build up the deposits needed to enter the market from their own resources.

“[O]verall, access to mortgage finance will still be constrained by the diminished number of active lenders and shortage of funding available to them,” said CML economist Paul Samter. “Meanwhile the Bank of Mum and Dad remains an apparently important source of help for young first-time buyers.”

Write to Diana Golobay.

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