U.K. First-Time Buyers Climb to the Highest Since 2007 Boom

The number of Britons buying their first home climbed to the highest in more than six years in March as the government’s Help-to-Buy program enabled borrowers to take out loans with smaller down payments.

Home-loan borrowers rose to 31,400, the most since August 2007, according to data compiled by LSL Property Services Plc. (LSL) The average buyer borrowed 83.5 percent of the value of their home, 2.9 percentage points more than a year earlier, according to LSL’s report.

The Help-to-Buy program, allowing purchasers to take out a mortgage with a down payment of as little as 5 percent, is prompting banks to offer more loans to first-time buyers. The number of loan products available to borrowers with a 5 percent deposit has tripled to 132 since the government extended the program in October, according to Genworth Financial Inc. (GNW)

“Help-to-Buy has allowed the bottom of the market to stay buoyant, despite property prices increasing,” LSL Director David Newnes said in the statement.

Buyers paid an average of 143,906 pounds for a home, down from 145,122 a month earlier, according to the statement. The average deposit fell 10 percent to 23,802 pounds during the year, the lowest in three years.

Test for Borrowers

In response to the 2008 real estate crisis, regulators are due to introduce the Mortgage Market Review test tomorrow after a three-year study. The test will require borrowers to prove they can afford to make mortgage payments even if interest rates rise. The Bank of England may be able to make the tests more stringent by applying higher hypothetical borrowing costs.

“You could see a spike in interest rates higher than is currently embedded in the market in the U.K., and we’d want to make sure that, as banks and building societies lend -- and very importantly, as households borrow -- they can withstand those shocks,” BOE Governor Mark Carney told reporters when the measure was announced in November.

To contact the reporter on this story: Patrick Gower in London at pgower@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net Andrew Blackman, Andreea Papuc

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