Building societies have seen a significant jump in the number of mortgages offered to first-time-buyers this year, with the number of loans up by 50pc, according to new figures from the Building Societies Association.
There was an even sharper increase in the number of mortgages granted to those with a 10pc deposit or less. In the first five months of this year the building societies arranged almost 9,000 of these loans, compared with just 3,400 in the same five-month period last year.
In total building societies helped 32,000 first-time-buyers get on the housing ladder over the period. According to Bank of England figures, building societies advanced £14.5bn in mortgage lending over the five months, which accounts for a quarter of all mortgage lending. This is up from a 20pc share of the mortgage market a year ago.
On a net basis, which takes into account repayments on existing mortgages, the total amount lent by building societies has also increased. In the five months from January to May net lending by mutual was £4bn, more than double the amount lent in the same period last year.
In contrast, net lending across the rest of the market contracted by £3.4bn in the first five months of the year.
The increase in lending have been underpinned by a stronger savings market. The savings balances held by building societies rose by £1.1bn in May, compared with an increase of just £200m in the same month last year. In the first five months of this years savings balances increased by £3.7bn, whereas the value of deposits fell by £1.1bn in the same period a year ago.
Paul Broadhead, the head of mortgage policy at the BSA, said: “Building societies and other mutual lenders continue to play a dominant role in supporting members of the public looking to buy a new home.”
The lending figures indicate that the Government’s initiatives to help stimulate the mortgage market are starting to have a notable effect. Funding for Lending, which has given banks access to cheaper funding, initially reduced the cost of mortgages only for those with large deposits or substantial equity in their home.
But mortgage brokers report that the scheme is starting to reduce the cost of home loans for those with just a 10pc deposit. There are also now more mortgage deals available in this segment of the market.