Lending boost helps house prices hit new high

HOUSE prices have shot up to their highest level on record for the fourth time this year, according to new figures.

Values jumped by £883 last month and are £7,275 higher than a year ago due to a substantial boost in mortgage lending to first-time ­buyers.

The UK’s recovering economy is also pushing the housing market forward and the number of sales is rising rapidly.

Property is now more expensive than at its previous peak of February 2008, reaching an average of £233,776, an LSL/Acadametrics ­survey found.

Other data shows mortgage lending to first-time buyers reaching its strongest level in five-and-a-half years. The Council of Mortgage Lenders reported the number of loans given to people taking their first step on the property ladder was 40 per cent higher in July than the same period a year ago and five per cent higher than in June.

Some 25,300 loans worth £3.5billion were advanced to first-time buyers in July, the highest number since November 2007.

Total UK mortgage lending stood at £16.7billion in July, a 29 per cent year-on-year increase, as lending to home movers, buy-to-let investors and people looking to re-mortgage also grew.

David Newnes, director of LSL Property Services, owner of Your Move and Reeds Rains estate agents, said: “The property market has turned over a new leaf after years of restrained activity following the financial crisis.

“Improving mortgage availability and pricing is boosting demand. Competition among lenders has opened up the market for first-time buyers, with growing product choice and competitive rates.

“First-time buyer activity, proving particularly strong in London, has been crucial in opening up many housing chains and in helping boost house prices further up the ladder.

“We are a long way off from the levels of activity seen before the financial crisis but the rise in first-time buyer activity is sending ­positive waves of confidence.” The Council of Mortgage Lenders’ ­figures show loans taken out by first-time buyers are becoming more affordable.

The typical size of a first-time buyer loan was almost unchanged in July on the previous month, at just over £117,000, but the typical household income for this sector has increased slightly on the previous month to just over £36,000.

A typical first-time buyer in July borrowed 3.31 times their income, down from a ratio of 3.33 in June. They also put down a smaller average deposit – 18 per cent compared with 20 per cent in June – as lenders’ appetite for risk appeared to be returning.

Lending to home movers rose by nine per cent on the previous year, with 32,000 loans worth £5.6billion agreed. express.co