First time buyers in Greater London borrow 27% quarter on quarter
First time buyers in Greater London borrowed 27% more in the second quarter of this year than they did a year ago, according to the latest figures from the Council of Mortgage Lenders.
Overall the lending market grew in both house purchase and remortgage activity compared to the previous quarter and the same period last year.
First time buyer loans totalled 12,300 in the second quarter in London, 4% up on the previous quarter, and 17% up on the same quarter in 2013. First time buyers in the period borrowed £3 billion, up 10% on the previous quarter and 27% on the second quarter of last year.
The data also shows that there were 9,000 home mover loans in the second quarter, up 1% on the previous quarter and 7% on the second quarter of 2013. Total value of these loans was £3 billion, up 9% on the first quarter and 26% on the second quarter 2013.
Remortgage lending in the quarter showed growth in London compared to the previous quarter and the same quarter in 2013.
House purchase lending to home buyers increased quarter on quarter in London totalling 21,300 loans, up 3% compared to the first quarter and the value of these loans totalled £6 billion, a rise of 9% on the first quarter. Compared to the second quarter of 2013, the number of loans increased 13% and value of these loans increased by 27%.
First time buyers typically borrowed 3.90 times their gross income, more than the 3.83 in the previous quarter and the UK average of 3.46. The typical loan size for first-time buyers was £212,000 in the second quarter, up from £200,000 in the previous quarter. The typical gross income of a first-time buyer household was £55,000 compared to £52,500 in the first quarter.
Due to higher house prices within London compared to the UK overall, there was a continued shift in the mix of properties bought by first time buyers in London towards more expensive properties. In the second quarter, 63% of first time buyers bought properties priced at more than £250,000, up from 57% in the first quarter and 51% in the same period last year. This was significantly higher than the UK overall level of 17%.
First time buyers in London have tended to put down larger deposits than in the UK and the report points out there was a period in 2009 and 2010 when there was no difference and typical deposits increased to 25% in London and in the UK, but whereas in the UK the typical loan to value has drifted up to 80%, in London it has remained at 75%.
In the second quarter, first time buyers paid 21.1% of gross monthly income towards capital and interest payments, a higher proportion of income than 20.7% in the first quarter. Lending to home movers showed similar, albeit slightly lower, growth patterns in Greater London to first time buyer lending.
Home mover…