Since the financial crisis, banks and building societies have cut back on lending activity, reserving their loans for low – risk borrowers with the ability to stump up a substantial deposit.

However, mortgage lending gathered pace during 2012, boosted by a strong increase in first – time buyers The Council of Mortgage Lenders (CML) reported a 12% annual increase in first – time buyers during 2012 – the fastest annual increase since 2007. According to the organisation , first – time buyers found mortgage finance became more accessible during 2012, despite having relatively small deposits at their disposal. One in 40 first – time buyers was able to take out a 95% mortgage, compared with fewer than one in 100 a year earlier, while one – fifth of first – time buyers borrowed 90% or more.

The CML hailed the Bank of England’s new Funding for L ending Scheme (FLS), commenting: “First – time buyers, in particular, have benefited from the effects o f better funding conditions and the FLS .” T he issue of raising a deposit continues to pose a significant problem for many potential first – time buyers , however . A report from the Home Builders Federation found an average UK first – time buyer has to save for a total of 10 years in order to put together enough money for a deposit, compared with just two and a half years in 2002. Meanwhile, first – time buyers in London have to save for an average of 24 years before they can get a foothold on the property ladder.

The Royal Institution of Chartered Surveyors reported an increase in house sales for a fourth consecutive month during January and commented: “It is still very early days to talk about a comprehensive market recovery but activity levels are still encouraging and there is some optimism out there that things could continue to improve.” However, the organisation did temper this positive news with a warning that high prices in certain areas of the UK – particularly in London and the south – east of England – could continue to inhibit growth in activity amongst first – time buyers.

House prices climbed by 3.3% during 2012 as a whole, according to the Office for National Statistics, although much of the rise was caused by a strong increase in property prices in Lon don and the south – east of England, where prices rose by 6.4% and 3.7% respectively. Excluding London and the south – east, UK house prices rose by a rather more modest 1.9% during 2012 – a figure that was below the prevailing rate of inflation.

March 2013