Loans leap but first time buyers fall

The boom in remortgaging helped to push lending to a record high last month but the number of first time buyers has fallen dramatically, according to lenders' figures yesterday.

The number of people buying their first home fell by almost a third from 253,000 in the first six months of 2002 to 174,000 in the first half of this year, adding to concerns that the market slowdown could be sharper than expected. A high number of first time buyers is generally regarded as an indicator of housing market buoyancy.

First time borrowers were responsible for 29% of lending in June, down from 44% in the same month last year, the Council of Mortgage Lenders said. Total mortgage lending rose to a record £22.5bn in June, beating the previous record of £21.8bn set in May. Demand for remortgaging is showing no sign of abating; it accounted for 49% of all borrowing last month.

Mortgage experts said they expect the upwards trend in remortgaging to continue, but some observers said they were worried by people remortgaging to borrow against their property at a time when consumer debt is also at a record high.

Meanwhile first time buyers are finding it harder than ever to buy. Ray Boulger, of mortgage broker Charcol, said he expected to see more first time buyers in the second half of the year but that there was "no doubt" that confidence had been damaged by conflicting house price forecasts.