Average maximum loan available to first-time buyers jumps in February

The average maximum loan available to first-time buyers bounced back to £237,500 in February, according to new research from Mortgage Broker Tools (MBT).

This was up from its record low of £230,555 in January but still remains around 8% down compared to February last year, when the average maximum loan available was £256,915.

The latest MBT Affordability Index stated that lenders have remained “relatively cautious” about the maximum loan size they’re prepared to advance to first-time buyers, but the number of lenders active in the market has increased, meaning that more buyers are able to access the loan size they require.

According to the data, there was at least one lender able to meet the loan requirements of 86% of first-time buyers in February this year, which represented the highest level on record. The index showed that the same figure was 71% in February 2020, before it slumped to a low last May – when there was an affordable option for just 59% of first-time buyers.

MBT CEO, Tanya Toumadj, highlighted that the government’s new mortgage guarantee scheme will open up new options for potential buyers who only have a small deposit.

“However, it’s important to remember that any buyers hoping to borrow 95% LTV under the scheme will need to demonstrate that they can afford the loan and so the state of the affordability landscape will play a big role in the success of the initiative,” Toumadj said. “This is something that we’ll be monitoring closely with the MBT Affordability Index over the coming months.

“The good news is that the average maximum loan sizes available to first-time buyers bounced back in February, from their record low in January. It is still harder for borrowers to access larger loan sizes than it was this time last year but, with more lenders focusing on this space, there are more options for those hopeful to take a first step onto the property ladder.”

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