The number of U.K. first-time homebuyers climbed to the highest in more than six years in December as the economy improved and people took advantage of the government’s Help-to-Buy mortgage program, LSL Property Services Plc said.
Purchases rose to 29,100 last month, the most since October 2007, the London-based broker said in a report today. Buyers paid an average of 148,575 pounds ($246,709), up 8.4 percent from a year earlier.
Prime Minister David Cameron’s efforts to stimulate the economy through homebuilding are bearing fruit as buyers take up the government’s offer to provide equity loans of up to 20 percent of a newly built home’s value. Combined with record-low borrowing costs, Help-to-Buy fueled the fastest price gains since 2006 last year, according to Nationwide Building Society.
“First-time buyers are returning to the market in their droves,” LSL Director David Newnes said in the statement. “There is a greater array of deals on offer to buyers with just a small deposit saved, and schemes like Help to Buy are providing vital support.”
The average down payment for a first-time buyer in December declined 3.6 percent to 26,533 pounds from a year earlier, LSL said. The average mortgage climbed 11.4 percent during 2013 to 122,040 pounds as house prices climbed.
Bank of England Markets Director Paul Fisher yesterday said there was no immediate need to raise interest rates. Speculation that home price increases were unsustainable prompted the BOE to end incentives for property loans in its Funding for Lending Scheme.
“Sharply rising house prices are a potential source of instability and we should not risk adding policy oil to that particular fire,” Fisher said.