The regulator’s Mortgage Lending Data also showed that new lending with a combination of high LTV and high income multiple also fell, to just below 1% of new lending.
Sue Anderson, head of member and external relations at the Council of Mortgage Lenders (CML), said: “The first-time market has been subdued for a very long time and even with higher LTV deals available, consumer appetite is low. This is a result of a number of factors including low house prices and speculation over base rate.
“There are indemnity schemes out there for buyers who are looking for that extra security over repayments, but the costs attached to those are quite high, which again discourages consumers from taking them out.”
She added that the government’s FirstBuy Direct scheme will help the 10,000 first-time buyers it is aimed at but unlikely to get the market out of the doldrums.
Meanwhile, the FSA also found that the number of new repossessions in Q1 2011 increased by 17% to 9,613 – the first rise in a year.
The number of new arrears cases in Q1 was 35,600, 8% lower than the previous quarter, while the total number of accounts in arrears at the end of Q1 was 337,000, 2% down on the previous quarter and 7% down on Q1 2010.
Consequently, the proportion of the residential loan book that is in arrears fell to 2.88%.
