By James Martini
Mortgage lending increased by almost a quarter in November as first-time buyers took advantage of the Government's Funding for Lending Scheme, according to the latest official figures.
The Council of Mortgage Lenders (CML) said the number of new loans advanced to first-time buyers in November grew by 8 per cent to 21,700, which was up 24 per cent on the previous year.
First-time buyer lending was worth £2.7 billion in November, which marked one of the highest monthly lending totals seen in the last three years.
New buyers also fuelled a 6 per cent increase in total mortgage lending in England and Wales in November last year, which the CML expects to continue well into this year.
Paul Smee, the CML director general, said: "Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending, suggesting that the underlying trend for year-on-year increases should continue.
"We expect the Funding for Lending scheme to continue to encourage a downward drift in interest rates."
Lenders have gradually slashed their rates since the Government launched its Funding for Lending Scheme in August last year, which prompted many banks and building societies to make more funds available to homeowners and businesses around England and Wales.
The scheme slowly clicked into gear and began to impact on the lending figures in October when first-time buyers accounted for 41 per cent of all house purchase loans, a market move that held strong in November.
The only other time first-time buyers have been higher than the longer-term average of 38 per cent since 2009 was in March last year, when new buyers rushed deals through before the end of the Government's stamp-duty concession.
Despite increased activity in mortgage lending, concerns have been expressed that much of the competition has been sparked between new buyers with deposits of more than 20 per cent, with few base-rate mortgages available for people with lower deposits.