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Mortgage lending to home buyers in London rises by 6% for second quarter

Number of home buyers taking out a mortgage in London is up 6% in the second quarter 2017 with strong demand from first time buyers.

Data from the Council of Mortgage Lenders (CML) shows the number of home movers in London advanced loans is 18,000 increasing by 5.8% compared to the previous quarter.

This includes first time buyers and home movers borrowing a total of £6.1 billion which has increased 10.6% over the previous quarter and 17.0% compared the same quarter in 2016.

Home movers have been particularly active for London in 2017 with numbers up 17.5% compared to last year at 7,400 during the quarter and value of mortgages up 28.0% at £3.0 billion.

Paul Smee, UK Finance Head of Mortgages said, home buying in the capital bounced back with both first time buyer and home mover lending showing growth compared to the same period a year ago.

Home movers show strong growth

Across the UK home movers are leading the market with strong growth month-on-month with the number of mortgage loans up 24.1% to 36,500 in June 2017.

The total value of loans is also higher up 25.8% over a month from £6.2 billion in May to £7.8 billion this month.

Activity from first time buyer was just as active with the number of loans advanced up 22.4% for the month to 36,000 and the value higher by 25.5% to £5.9 billion.

Figures for June show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year and an especially high number of loans for first time buyers, says Mr Smee.

In contrast the number of remortgage buyers in London reduced by -12.3% in the second quarter to 12,800 when compared to the previous quarter at 14,600.

The value of remortgage loans reduced by a smaller proportion of -9.7% to £3.8 billion compared to the previous quarter of £4.3 billion.

 Borrowing increases for home buyers

The average amount a first time buyer in London needs to buy their first home has increased by £13,300 over the quarter to £268,100 compared to the average for the UK of £139,000.

In terms of affordability the borrowing for London is an income multiple of 4.02 whereas the UK income multiple is 3.59.

Average loan to values (LTV) for London are 72.8% with a deposit of £100,169, significantly more than the national average LTV of 82.9% with a deposit of £28,671.

In London borrowing amounts for home movers over the quarter is £353,500 compared to £180,000 with income multiples for London at 4.01 compared to 3.39 for the UK.

Loan to values are lower for home movers with London at 66.9%  and equity £174,900 and the national average LTV of 73.0% with equity of £66,575.

There is less competition from for buy-to-let investors with a slowdown of new purchases after recent changes to stamp duty tax and taxation allowance on mortgage interest.

Homeowners in London have a much greater amount of equity in their property and when they are retired, the older equity release mortgage buyer can access the wealth in their property to consolidate debt or reduce inheritance tax owed by your beneficiaries.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart.

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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