The number of first-time buyers in London reached a near three-year high in the third quarter of 2012, with a total of 10,000 taking out mortgages.
The Council of Mortgage Lenders reports published the report alongside a new quarterly review entitled ‘Housing in London: challenges and solutions’.
The analysis found that, at 50 per cent, the level of home-ownership in London is the lowest in the UK, yet the capital’s residents have accounted for 28 per cent of all first-time buyer lending nationally, due to its population.
The CML also found that London’s FTB’s put down larger deposits than in other parts of the UK, despite higher house prices and tougher affordability criteria.
First-time buyers in London purchased properties with an average loan-to-value (LTV) ratio of 75 per cent, a figure unchanged since the third quarter of 2008, and less than in the rest of the UK at 80 per cent.
It was found that thecharacteristics of London’s first-time buyers differ from the UK average in several key areas:
- First-time buyers are older in London (average age of 31) compared to the rest of the UK (29) with more time to build savings and achieve higher paying employment.
- Parental assistance is greater. Recent estimates indicate that only 28 per cent of first-time buyers in London bought unassisted, compared to 34 per cent in the UK overall.
- Their incomes are higher. The average first-time buyer household in London had an income of £50,000 compared to £34,000 in the UK overall. They borrowed an average of 3.5 times their income with mortgage payments typically consuming 21.3 per cent, compared to figures in the rest of the UK where the average income multiple amounted to 3.25 and 20.1 per cent of income was taken by mortgage payments.
- First-time buyers in London make up a larger proportion of the total mortgage market – around 50 per cent compared to around 40 per cent in the UK overall, reflecting demographics in London where there tend to be more young people of a typical first-time buyer age.
Loans for house purchase in London increased in the third quarter, as in the rest of the UK. A total of 20,600 house purchase loans (worth £5,070 million) were advanced in London, up by 22 per cent compared to the second quarter and a 4 per cent increase compared to the same period last year. This rate of growth compared favourably to the UK overall, where house purchase lending increased by 13 per cent on the second quarter. The total value of loans for house purchase (5,050 million) marked the highest figure since the last quarter of 2007.
Contributing to the increase in house purchase lending, lending to home movers rose by 18 per cent compared to the second quarter. A total of 10,500 loans (worth £2,950 million) were advanced to home movers in London, slightly lower than the 10,600 loans taken out in the third quarter of 2011. The LTV ratio for home movers fell in the third quarter – at 66 per cent it is now at the same level as the first quarter of 2011.
As in the UK overall, remortgage lending in London was weaker in the third quarter compared to both the previous quarter and the same quarter last year. A total of £2,050 million was advanced to borrowers remortgaging in the third quarter, down from £2,120 million in the second quarter, and a 16 per cent fall compared to this time last year.
Commenting on the data, CML director general Paul Smee said:
“The London housing market faces similar issues to the rest of the UK in terms of a lack of supply and affordability, yet different demographics, population flows and tenure patterns mean that it is also unique.
“With the Mayor now directly responsible for housing strategy and investment in London, we look forward to seeing his finalised London Housing Strategy. Lenders want to be recognised as part of the solution and we will work constructively with the government and the GLA on deliverable solutions to London’s housing challenges.”
Loading ...