Increased income multiple lending and a confidence in their own financial security has given first-time buyers a new found determination to get onto the first rung of the housing ladder, according to a new report.

Mortgages Direct’s monthly survey reveals that the number of first-time buyers has jumped dramatically, increasing by 11% in December to 48%, the highest level since the survey began.

Percentage taking out mortgages who are first-time buyers

Peter Gladdy, Mortgages Direct director, commented: “The dramatic increase in first-time buyers in December, accompanied by a slight increase in buy-to-let mortgages, goes against all normal seasonal trends and may well reflect a renewed determination to get onto the housing ladder.”

“The general optimism evident in the house price predictions for 2007, which range from growth of 3.5% to as much as 10% has also helped these buyers take the plunge.”

“First-time buyers have been able to take advantage of some good fixed rate deals and the high level of loans may also be a reflection of the increased generosity of lenders offering income multiples of up to five times. However, first-time buyers should be careful not to over-stretch their finances and make sure that they are confident about being able to afford the repayments, especially when deals end.”

Mortgages Direct’s survey also reveals that 94% of borrowers are continuing to opt for fixed rate mortgages, down only 3% from November, with two year fixed deals remaining the most popular at 58%. However, there was a slight increase in demand for variable rates in December with 6% of borrowers opting for these mortgages.

“It is clear that borrowers remain cautious, worried about affordability constraints,” commented Peter Gladdy. “However, the increase in the percentage of variable rates in December may be an indication of a slight increase in confidence as to future interest rate moves, and we could see even more borrowers returning to variable mortgages if the interest rate remains fixed in the early months of 2007.”