Consumer confidence about taking out a mortgage is returning fuelled by first time buyers, research from Alliance & Leicester (A&L) reveals.
The lender says the percentage of households which say they are thinking about moving, buying a property for the first time or remortgaging before the end of the year has double since January from 7% to 15% now.
While not everyone acts on such intentions A&L argues the fact many more people are considering taking out a mortgage now than in January illustrates greater confidence in the housing market and helps to explain higher activity levels.
The first four months of 2006 saw mortgage lending increase 28.4% on the same period last year despite a slight drop in lending in April.
A&L also cites Council of Mortgage Lender (CML) figures which show first time buyers accounted for over a third (38%) of new mortgages between January and March, while its own research suggests the percentage of under-30s planning to get onto the property ladder has increased by a third since January from 12% to 16%.
Moreover affordability levels are at their best since the first half of 2004 and consumers appear to be making attempts to reduce their levels of indebtedness elsewhere by reducing credit card and personal loan balances for the first time in seven years.
And despite record levels of mortgage lending affordability remains at a similar level to last year. In the first quarter of 2006 interest payments on new mortgages took up 14% of household income. Meanwhile on the average mortgage interest payments took up only 10% of household income.
Chris Rhodes, managing director of A&L Retail Banking, says the research shows a buoyant housing market in which the return of first time buyers is enabling others to make the next move up the property ladder. Added to consumers taking a more responsible attitude to borrowing Rhodes claims the market is also proving its resilience.
“While household incomes have grown modestly, interest rates are lower than a year ago. Overall the cost of servicing a mortgage has therefore fallen slightly, despite gently rising house prices,” he adds.
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