New Council of Mortgage Lenders (CML) data on the characteristics of
lending in Greater London in the second quarter of 2015 outlining
mortgage lending to first-time buyers, home movers and remortagors.
Lending in the second quarter 2015:
• Home-owner house purchase activity in Greater London came out of the traditional seasonal dip to show growth in the second quarter by volume and value, but levels were still down compared to the same quarter last year.
• First-time buyer activity saw similar trends with an increase in levels on the first quarter of the year, but down on the same quarter last year.
• Home movers also had the same trend as first-time buyers in both volume and value.
• Unlike house purchase activity, remortgage lending had quarter-on-quarter and year-on-year growth in both volume and value.
Paul Smee, director general of the CML, commented:
“As in the UK overall, the London market came out of the usual seasonal dip in the first few months of the year and saw increased activity; but volumes are still on the same period last year. Remortgage activity has shown quarterly and year-on-year growth after a period of stagnation. Borrowers appear to be taking advantage of competitive mortgage rates, ahead of a potential future interest rate rise.”
Lending for house purchase and remortgage
House purchase lending in London saw a quarter-on-quarter rise, in both the number of loans and the amount borrowed, compared to the first quarter of 2015. Despite this, there were fewer borrowers in London than in the same period in each of the two preceding years.
House purchase lending this quarter was driven mostly by first-time buyers, who made up 57% of all house purchase activity.
Remortgage lending also saw a rise year-on-year and quarter-on-quarter in amount borrowed and in number of loans.
Lending to first-time buyers
First-time buyers in London typically borrowed 3.81 times their gross household income, down from 3.83 the previous quarter but more than the UK average of 3.38.
The typical loan size for first-time buyers was £224,994 in the second quarter, up 5% on the first quarter and 6% on the same quarter last year. The typical gross income of a first-time buyer household was £58,685, up 5% compared to the first quarter and 6% up on the second quarter of 2014.
First-time buyers' payment burden in the second quarter was 19.4% of gross income being spent to cover capital and interest payments, down on the first quarter's 20.3% but higher than the 18.4% UK average.
Lending to home movers
Home movers in London typically borrowed 3.75 times their gross household income, up from 3.69 the previous quarter and higher than the UK average of 3.08.
The typical loan size for home movers was £300,999, the first time average new loans have breached the £300,000 mark. The figure was up 3% on the previous quarter and substantially higher than the £160,994 UK average. The typical gross income of a home movers' household was £83,765, up 2% on the first quarter and 1% on the second quarter 2014.
Home movers' payment burden in the second quarter saw them spend 19.3% of their gross household income to cover capital and interest payments, down from 20.1% in the first quarter but higher than the 18% UK average.
(Source - CML Press Release)